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on Post Keynesian Economics |
| By: | Aggela Papadopoulou; Giorgos Gouzoulis |
| Abstract: | This paper examines the Black-White pay gap in the United States from 1989 to 2024 using quarterly data from the Bureau of Labor Statistics and the Federal Reserve’s Distributional Financial Accounts. Building on existing political economy research, which suggests that personal debt reduces workers’ bargaining power by making them more risk-averse in wage negotiations - particularly when job loss threatens their ability to service debt - this study argues that racial discrimination in both personal credit markets and wage negotiations disproportionately disciplines racialized social groups. Regression analysis shows that rising household debt liabilities-to-assets ratios for Black households and a higher share of white business owners have crucially contributed to the persistent wage gap between Black and White Americans. Interestingly, interacting the two coefficients shows that a higher share of white businesses slightly mitigates the effect of debt held by Black workers on the black-white earnings gap. This potentially implies that, despite discriminatory practices, white businesses might represent a relatively more stable employment option for indebted Black workers, thereby reinforcing a vicious cycle of self-perpetuating racialized economic inequality. |
| Keywords: | Racial Pay Gap; Personal Debt; Household Financialization; United States |
| JEL: | B50 J15 J31 J70 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2523 |
| By: | Jon D. Wisman; Quentin Duroy |
| Abstract: | Technological advances and freer international trade have greatly increased economic welfare. However, the benefits have been unevenly shared, with harsh consequences falling upon society’s poorest and least educated. Employment insecurity and stagnant wages in the United States have provoked a backlash that has contributed to polarized politics and support for authoritarianism, posing a danger to democracy and future economic dynamism. There is urgency in crafting institutional innovations to enable capturing the future benefits of technology and trade in a sustainable and just manner. Two policy responses have been proposed: A universal basic income that provides everyone with a set amount of continuous income, and guaranteed employment at living wages, and where necessary, reskilling to remain productive members of society. This article argues for the superiority of the second response. The idea of guaranteeing employment is hardly new or especially radical, having been proposed by FDR during the 1930s and embraced by elements within the Democratic Party until the late 1970s. What is new is the need to pair this with reskilling where necessary. This article surveys the benefits and opposition to unleashed technological change and free trade. It then addresses the superiority of guaranteeing employment over a universal basic income. It concludes by revealing how guaranteeing employment and reskilling would work, taking note of the many benefits beyond meeting the challenges of ever more robust technological change and globalization. |
| Keywords: | Automation, Robotization, AI, Globalization, UBI, Guaranteed employment |
| JEL: | E24 F19 H5 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:amu:wpaper:2025-03 |
| By: | Domenico delli Gatti; Filippo Gusella; Giorgio Ricchiuti |
| Abstract: | This paper investigates Minsky's cycles by extending the paper of stockhammer et al. (2019) with a nonlinear model to capture possible local real-financial endogenous cycles. We trace nonlinear regime changes and check the presence of Minsky cycles from the 1970s to 2020 for the USA, France, Germany, Canada, Australia, and the UK, linking the GDP with corporate debt, interest rate, and household debt. When considering corporate debt, the results reveal real-financial endogenous cycles in all countries, except Australia, and across all countries when interest rates are included. We find evidence for an interaction mechanism between household debt and GDP only for the USA and the UK. These findings underscore the importance of nonlinear regime transitions in empirically assessing Minsky's theory. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.04348 |
| By: | George Wheaton (Department of Economics, New School for Social Research, USA) |
| Abstract: | Vector auto-regressive (VAR) models remain highly influential in the macroeconomic literature regarding the existence and explanation of the macroeconomic Goodwin pattern – a counter-cyclical movement in capacity utilization × labor share space. The study by Barbosa-Filho and Taylor (2006), which provided the theoretical backbone of the neo-Goodwin model, demonstrated through vector auto-regression that the theoretically required profit-led nature of demand was empirically prevalent in the Goodwin pattern in the US, and further studies follow its approach. This is often cited in the debate about whether capitalism has profit-led or wage-led demand characteristics, with implications for macroeconomic policy. In this paper, I replicate the VAR approach and extend it to recent years. Through additional econometric techniques not currently employed in the literature, I demonstrate that the supposed profit-led demand derivatives are statistically insignificant. Noting further issues with robustness, I critically analyze the use of VAR models for this purpose, suggesting that other methods need be employed in the debate between profit-led and wage-led demand regimes and the Goodwin pattern. |
| Keywords: | Goodwin pattern, business cycles, profit-led demand, wage-led demand, vector auto-regression, delta method, Fieller’s theorem |
| JEL: | E11 E12 E32 E60 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2517 |
| By: | Goodhart, C. A. E.; Postel-Vinay, Natacha |
| Abstract: | The City of Glasgow Bank failure in 1878, which led to large numbers of shareholders becoming insolvent, generated great public concern about their plight, and led directly to the 1879 Companies Act, which paved the way for the adoption of limited liability for all shareholders. In this paper, we focus on the question of why the opportunity was not taken to distinguish between the appropriate liability for ‘insiders, ’ i.e. those with direct access to information and power over decisions, as contrasted with ‘outsiders.’ We record that such issues were raised and discussed at the time, and we report why proposals for any such tiered liability were turned down. We argue that the reasons for rejecting tiered liability for insiders were overstated, both then and subsequently. While we believe that the case for such tiered liability needs reconsideration, it does remain a complex matter, as discussed in Section 4. |
| Keywords: | corporate governance; limited liability; bank risk-taking; financial regulation; financial crises; senior management regime; banks; banking |
| JEL: | G21 G28 G30 G32 G39 N23 K22 K29 L20 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130243 |
| By: | Baker, Maher Asaad |
| Abstract: | Purpose This paper provides a critical synthesis of the key developments in the application of behavioral economics (BE) to public policy from 2015 to 2025. It analyzes the field's institutionalization, the evolution of its core concepts, and the significant critiques that have shaped its modern trajectory. Design/methodology/approach This article is a comprehensive literature review, synthesizing findings from published academic papers, institutional reports, and meta-analyses. It systematically maps empirical findings across policy domains and critically examines ethical, methodological, and practical challenges. Findings The review finds that BE has matured from a novel tool into an established field. Mechanisms like defaults, framing, and friction reduction have been widely deployed with varying success. This period has also been defined by a critical reckoning with the replication crisis and ethical debates concerning autonomy. The field is responding by integrating with computational social science and artificial intelligence, moving toward more interdisciplinary and empowering approaches. Originality/value This review offers a nuanced, critical analysis of a pivotal decade in behavioral public policy. It moves beyond cataloging interventions to provide a coherent narrative of institutionalization, challenge, and adaptation. The paper concludes that the field's value lies in fostering a more realistic, evidence-based, and human-centric paradigm for policy design. |
| Keywords: | behavioral economics, literature review, policy design, nudge, choice architecture, public policy, policy design |
| JEL: | B40 D03 D04 D90 H00 |
| Date: | 2025–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126231 |
| By: | Yusuke Takahashi (Bank of Japan); Kazuki Otaka (Bank of Japan); Naoya Kato (Bank of Japan) |
| Abstract: | In this article, we present some preliminary analyses in which Large Language Models (LLMs) are used as economic agents in simulations, as an example of utilizing Generative AI in economic analysis. Existing research reports that Generative AI provides responses consistent with predictions suggested in fields like behavioral economics. There are also some studies which have applied Agent-Based Models (ABM) by treating Generative AI as "players" in a market. However, even though Generative AI exhibits behavior similar to actual economic agents, in reality, it is merely outputting statistically consistent responses based on patterns found in its training data. Therefore, whether the results of simulations that treat Generative AI as economic agents are consistent with economic theory depends crucially on the AI's training data. In this article, we conduct simple ABM simulations to demonstrate how Generative AI can be applied, and examine whether its responses are aligned with intuition and economic theory. Our results are consistent with economic theory: (1) consumers adjust their spending in response to real wage fluctuations; and (2) firms find it easier to pass costs on to consumers in a monopoly market compared to a duopoly market. We conclude that it is necessary to continue verifying through other economic analyses whether simulations using Generative AI consistently lead to conclusions congruent with economic theory. |
| Keywords: | Generative AI; Agent-Based Model; Consumer Behavior; Price Setting Behavior |
| JEL: | C63 D11 D40 |
| Date: | 2025–11–13 |
| URL: | https://d.repec.org/n?u=RePEc:boj:bojlab:lab25e01 |