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on Post Keynesian Economics |
| By: | Jihyuan Liuh |
| Abstract: | This paper aims to provide a micro-foundation for the Cobb-Douglas production function based on statistical physics, and to launch a critique of its political-economic implications. By introducing the Maximum Entropy Principle and an axiom of scale invariance, we prove that in an economic system with incomplete information, the most unbiased distribution of micro-level technical coefficients must take the form of a truncated power law. Based on this, statistical aggregation naturally leads to the emergence of a constant-returns-to-scale Cobb-Douglas function at the macro level. This result not only provides a micro-foundation for neoclassical growth models that does not rely on a representative agent or value aggregation of capital but, more importantly, reveals that the aggregate production function is essentially a lossy compression of micro-level information. In this compression process, the social-historical relations embedded in distribution parameters are 'naturalized' into seemingly eternal technical laws, which is the manifestation of Marx's critique of 'fetishism' at the level of mathematical logic. This paper further deepens the understanding of the production function as a statistical phenomenon rather than a technical law through dialogues with Marx, the Cambridge School, and Shaikh. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.03812 |
| By: | Magacho, Guilherme; Spinola, Danilo |
| Abstract: | This paper extends the traditional Leontief Input-Output (I-O) model by introducing a traverse disequilibrium framework that captures simultaneous quantity and price adjustments over time. Unlike standard static I-O models, this approach incorporates continuous-time adjustments in production, prices, and resource utilization. The analysis models how sectors respond to demand fluctuations through inventory accumulation and production adjustments, allowing for temporary imbalances between supply and demand. The model is further extended to include price-setting mechanisms. In this framework, sectors adjust markups in response to cost fluctuations and inventory deviations, and biophysical resource utilisation, leading to physical constraints and cost-push inflation. Calibrated using Brazil's Input-Output matrix and land-use data, the framework is applied to sectoral shocks, including demand surges and price rigidities, to assess their sectoral and macroeconomic impacts. The results highlight the importance of adjustment speeds in shaping economic dynamics, showing that rigid price and quantity settings amplify inventory cycles, while fast quantity adjustments increase output volatility. Sectoral interdependencies create cascading effects, demonstrating how price, and quantity shocks propagate across industries. Additionally, the dependence on environmental services illustrates how pressures on scarce resources feedback into prices and quantities. |
| Keywords: | Environmental Input-Output; Traverse Dynamics; Disequilibrium Adjustments; Price Stickiness; Inventory Adjustment; Biophysical Constraints |
| Date: | 2025–11–30 |
| URL: | https://d.repec.org/n?u=RePEc:akf:cafewp:40 |
| By: | Stefano Vrizzi; Daniel W. O'Neill |
| Abstract: | The 'Doughnut' of social and planetary boundaries has emerged as a popular framework for assessing environmental and social sustainability. Here, we provide a proof-of-concept analysis that shows how machine learning (ML) methods can be applied to a simple macroeconomic model of the Doughnut. First, we show how ML methods can be used to find policy parameters that are consistent with 'living within the Doughnut'. Second, we show how a reinforcement learning agent can identify the optimal trajectory towards desired policies in the parameter space. The approaches we test, which include a Random Forest Classifier and $Q$-learning, are frugal ML methods that are able to find policy parameter combinations that achieve both environmental and social sustainability. The next step is the application of these methods to a more complex ecological macroeconomic model. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.02200 |
| By: | Naudé, Wim (RWTH Aachen University) |
| Abstract: | This paper focuses on the relationship between capitalism and the decline in democracy in the West over the past quarter-century. Using data from the V-Dem Institute, Freedom House, and the World Inequality Database, a strong correlation is found between inequality, the rise of tech billionaires, and democratic erosion. This correlation is explained by describing how tech oligarchs grow their political influence through their digital platforms, and their societal control via surveillance and influence of sense-making. The pivot of tech oligarchs toward the Military Industrial Complex (MIC) will accelerate the erosion of democracy. The implication is that efforts to regulate the digital economy to protect democracy will not be effective unless accompanied by decisive measures to break up the oligarchy and dismantle the Permanent War Economy. |
| Keywords: | capitalism, inequality, oligarchy, democracy |
| JEL: | P16 D31 O33 O40 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18293 |
| By: | Zhou, Bin |
| Abstract: | This study investigates the transformative impact of generative models on social paradigms, highlighting a shift from predominantly result-oriented frameworks to those that prioritize process orientation. Through a comprehensive literature review, interdisciplinary analysis, and multi-domain case studies, this study examines how generative models influence work, learning, and innovation methods, fostering deeper engagement with process-oriented practices. The findings reveal that generative models diminish the static value of answers by making them easily replicable, while amplifying the significance of inquiry and exploration as dynamic, generative processes. This supports our hypothesis, demonstrating that questioning serves as a critical mechanism linking technical innovation with social adaptation and evolution. Furthermore, a process-oriented paradigm offers a pathway to addressing humanity's "crisis of meaning" by emphasizing inquiry and engagement over static outcomes. In addition, the applicability of this process oriented framework extends to market communication, where generative models enable interactive and co creative brand–consumer relationships. This study underscores the profound interplay between technological advancements and societal evolution, calling for intentional and proactive strategies to navigate the implications of generative AI. |
| Date: | 2025–12–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:qswzc_v2 |
| By: | Musibau, Hammed (School of Economics and Public Policy, University of Adelaide, Adelaide, Australia); Nepal, Rabindra (School of Business, Faculty of Business and Law, University of Wollongong, Wollongong, Australia); Jamasb, Tooraj (Department of Economics, Copenhagen Business School) |
| Abstract: | This study investigates environmental impacts of wealth inequality, and the moderating roles of governance quality, education, and readiness for green transition. Using CO2 emissions as a multidimensional indicator, the study employs panel data from 216 countries (1970-2023) and IV-2SLS methodology. Findings suggest equitable societies achieve better environmental outcomes through social cohesion and inclusive governance. Strong institutions, education access, and renewable energy investments mitigate inequality's environmental effects. |
| Keywords: | Wealth Inequality; Environmental Degradation; Governance; Green Energy; Education; Sustainable Development |
| JEL: | C33 H23 I25 O44 Q56 |
| Date: | 2025–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:cbsnow:2025_008 |
| By: | Emilio Ocampo; Nicolás Cachanosky |
| Abstract: | Exchange rates reflect macroeconomic fundamentals, which in turn are regime dependent. In politically unstable countries, expectations of regime change can have a significant impact on exchange rate dynamics. We exploit Argentina’s unexpected 2019 primary election results as a natural experiment to gauge the impact of a change in such expectations. When populist candidate Alberto Fernández’s victory margin (15.6%) doubled pre-election polling predictions (7.2%), financial markets immediately recalculated the probability of a change in regime. Using parallel market exchange rates, we estimate that the real exchange rate differential between populist and non-populist regimes exceeds 100%. This large gap creates extreme political sensitivity: regime change expectations of 7-16% can trigger 10% exchange rate movements. Our findings help explain persistent exchange rate volatility in emerging economies and highlight the limitations of purely macroeconomic stabilization approaches when political sustainability is uncertain. |
| Keywords: | exchange rates, regime uncertainty, Argentina |
| JEL: | E42 E52 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cem:doctra:908 |
| By: | Iv\'an L\'opez-Espejo |
| Abstract: | This article examines the law of the tendency of the rate of profit to fall in the Spanish economy between 1960 and 2024, considering the organic composition of capital and the rate of surplus value as central variables. Its aim is to determine whether this law, formulated by Marx in Capital (Vol. III), continues to operate in the contemporary context. The methodology consists of transforming orthodox macroeconomic categories derived from the Spanish National Accounts (CNE), available in BDMACRO, into Marxist variables: constant capital ($c$), variable capital ($v$), and surplus value ($pv$). Based on these, historical series of the organic composition of capital ($q$), the rate of surplus value ($pv'$), and the rate of profit ($g'$) are constructed, adjusted to constant prices to ensure temporal coherence and comparability. The results show a sustained increase in $q$ and a slight decrease in $pv'$, generating a tendential decline in $g'$ with cyclical fluctuations associated with specific crises. The conclusions empirically confirm the validity of the law in Spain, highlighting the historical limits of capitalism and providing quantitative evidence on the structural dynamics of profitability. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.23427 |