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on Post Keynesian Economics |
| By: | Benjamin Jungmann; Eckhard Hein; Juan Manuel Campana |
| Abstract: | Post-Keynesian conflict inflation models have received renewed attention in the course of the recent inflationary processes related to the recovery from the Covid-19 crisis in 2020 and the hike of energy prices in the context of the start of the Russian war on Ukraine in 2022. Although the basic principles of conflict inflation can be presented in a closed economy framework (e.g. Hein 2023, chap. 5), examining current sources and triggers of inflation requires open economy models. Post-Keynesian economics has presented several of these models (e.g. Blecker 2011, Vera 2014, Bastian and Setterfield 2020), which differ in the role assigned to the nominal and the real exchange rate (RER), on the one hand, and the stability of the wage and price Phillips curves, on the other hand. This paper first provides a systematic overview of post-Keynesian open economy conflict inflation models using the treatment of the RER and the stability of the Phillips curve as the main clustering criteria. Second, it provides a model including an unstable Phillips curve and a policy rule targeting a certain RER in response towards trade imbalances. The model distinguishes three equilibrium rates of employment: the goods market equilibrium rate of employment, the distribution claims equilibrium and hence stable inflation rate of employment, and finally the external balance equilibrium rate of employment. The interaction of these three rates drives the system. Finally, the model examines the conditions for an overall equilibrium and its stability. |
| Keywords: | conflict inflation, open economy, exchange rate policy, post-Keynesian model |
| JEL: | E12 E31 E61 F41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:imk:fmmpap:120-2025 |
| By: | Fabio Petri |
| Abstract: | This is a rejoinder to professor Schefold’s 2022 reply to my 2021–2022 criticism of his views on what is left of the Cambridge critique of neoclassical capital theory. I concentrate on the main disagreements. I find Schefold’s reply unconvincing on the usefulness of aggregate production functions, and also on the empirical evidence of a rarity of reswitching. I clarify better than in 2022 my reasons for rejecting his a priori approach to the probability of double switching. I insist that the impossibility to determine the endowment of capital destroys the neoclassical labour demand curve and the neoclassical investment function, leaving real wages and employment in need of a different theory, which renders a turn to a classical-Keynesian approach inevitable. |
| Keywords: | capital theory; Cambridge controversy; reswitching; aggregate production function |
| JEL: | B51 D24 D50 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ris:sraffa:022047 |
| By: | Guido Ianni |
| Abstract: | This paper extends the classical surplus approach to value and distribution to an open economy framework with an arbitrary number of commodities and explicitly allowing for persistent profit rate differentials across countries. The analysis builds upon Sraffa’s price equations, incorporating inter-industry linkages between two trading nations. We derive the wage curve for an open economy, demonstrating that while the closed-economy wage-profit relation is a one-dimensional curve, its open-economy counterpart forms a higher dimensional surface with additional degrees of freedom. This structural difference implies that distributive closures play a more significant role in open economies, as profit and wage rates in one country are no longer uniquely tied together. Our results highlight the geopolitical dimension of class struggle, showing that domestic wage and profit rate adjustments can have significant spillover effects on the global distribution of surplus. |
| Keywords: | open economy; income distribution; wage curve |
| JEL: | B51 C67 F10 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:ris:sraffa:022046 |
| By: | Benyounes Rahouti (Université Mohammed Premier [Oujda] = Université Mohammed Ier = University of Mohammed First) |
| Abstract: | Uncertainty, as defined by Knight and Keynes in the 1920s, is now an essential key to understanding large-scale unpredictable events, such as 2020's pandemic. The inability of predictive models to anticipate the scope and impact of this unprecedented crisis has highlighted the relevance of a century-old theory that has long been marginalized in favor of predictive mathematical formalism. Beyond the economic field, this study offers an extensive and in-depth bibliometric analysis of literature to assess whether Knightian and Keynesian uncertainty remains overshadowed or whether, on the contrary, it is attracting renewed interest considering contemporary context. Using a corpus of 455 multidisciplinary articles from Scopus database from 1977 to 2024, this research uses R-Biblioshiny and VOSviewer software to provide a detailed overview of publication dynamics, key players and collaborative interactions. Through performance and scientific mapping analysis, the results reveal that the subprime crisis and the Covid shock acted as catalysts for a renewed awareness of the risk/uncertainty dichotomy, while highlighting the existence of two paradigms. The first, emerging and with a strong academic impact, tends to reintegrate this uncertainty into operational modelling frameworks, while the second, derived from heterodox economics, remains attached to its irreducible conception. |
| Keywords: | Bibliometrics, Risk, Uncertainty, Keynes, Knight, Knight Keynes Uncertainty Risk Bibliometrics |
| Date: | 2025–10–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05363875 |
| By: | boughabi, houssam |
| Abstract: | This paper investigates the interplay between distributive conflict, investment dynamics, and persistent unemployment within a Kaleckian framework, emphasizing the long-memory properties of wages. We develop a stochastic model in which wages adjust adaptively to historical discrepancies between prices and wages, while investment is driven by expected profitability rather than market clearing. Applying this model to Germany over the period 1990–2024, we provide evidence that cumulative divergences between prices and wages generate persistent effects on real wages, aggregate demand, and employment. Our findings highlight that long-memory wage dynamics amplify the unemployment consequences of investment-driven accumulation, demonstrating a structural mechanism through which distributive conflict and inflation interact. The results underscore the importance of historical wage inertia and profit-led investment in shaping macroeconomic outcomes, offering new insights into the sources of persistent unemployment in advanced economies. |
| Keywords: | Kaleckian economics, wage–price dynamics, long-memory, distributive conflict, persistent unemployment |
| JEL: | C22 E12 E24 E32 J30 |
| Date: | 2026–01–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127571 |
| By: | Kim Ristolainen (Turku School of Economics, University of Turku, Finland) |
| Abstract: | We develop a novel sentiment measure derived from survey data to empirically vali date the Minsky–Kindleberger view on financial crises. Using survey data from multiple countries, we decompose beliefs into components explained by public information that are orthogonal to optimal machine beliefs, constructing a framework that isolates sentiment and its dispersion among individuals. We show that deviations from machine-optimized benchmarks arise from systematic misaggregation of public information. The sentiment measure is validated through its predictive relationships with financial markets and belief dynamics consistent with heterogeneous-beliefs asset pricing theory. We extend this senti ment measure historically for a panel of 78 countries using machine learning models trained on BERT embeddings of historical news articles (1903–2020). The backcasted sentiment shows that shocks in median sentiment predict credit booms in the non-tradable corporate sector, which prior research has linked to financial crises, providing the first historically large-scale empirical validation of the Minsky cycle. We further show that sentiment, which is a misaggregation of public information, is influenced by memory-related dynamics, as the time elapsed since major crises and the share of young-to-old people in the population strongly predict surges in optimism even when recent economic developments are controlled for. |
| Keywords: | Survey data, Sentiment, Memory, Machine Learning, Text Data, Credit growth, Financial Crisis |
| JEL: | E44 E51 G01 D84 G41 E32 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:tkk:dpaper:dp173 |
| By: | Fix, Blair |
| Abstract: | In science, there’s an inherent trade off between comprehensibility and realism. Realistic models tend to be intricate … even convoluted. But to be comprehensible, a model must be simple. [***] For a good example of this trade off, look to high-school physics. In the real world, we know that projectiles are affected by aerodynamics. (That’s why frisbees fly differently than baseballs.) But since aerodynamics are complicated, high school teachers ignore them. Instead, they teach students that earthbound projectiles behave as they would on the moon — blissfully unaffected by air drag. This simplification is a lie, of course. But it’s useful for teaching students about the essence of Newton’s equations. [***] Science is filled with this sort of simplification. We learn about the world by developing toy models — models which simplify reality, yet retain (we hope) an element of truth. [***] In economics, there’s no shortage of toy models. But most of these playthings belong in the landfill; they’re models that assume away the most pertinent features of the real world. (For example, neoclassical economic models capitalism by assuming ‘perfect competition’, whereas the real world is marked by pernicious oligarchy.) [***] In short, if we want simple models that capture key elements of human behavior, it’s best to leave mainstream economics behind. Instead, a good place to start is with population biology — specifically the Lotka-Volterra model of predator-prey dynamics. Like projectile motion that neglects aerodynamics, the Lotka-Volterra equations are a toy model of how predator and prey populations respond to each other. In a sense, it’s the simplest ‘systems model’ that still provides useful insights about the real world. [***] In what follows, we’ll take a tour of the Lotka-Volterra model, and see how it gives insights into human behavior. |
| Keywords: | Alberta, energy, Japan, predator-prey models, resources, sabotage, system dynamics, United States |
| JEL: | P1 P18 Q4 Q47 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:334357 |
| By: | Azam, Jean-Paul |
| Abstract: | This chapter tries to bridge the gap between peace and conflict theory, on the one hand, and the practice of professional Peacebuilders in post-conflicts settings, on the other hand. It first highlights some of the main insights brought about by the theorists, linking the latter to standard bargaining theory, institutional economics, as well as to the theory of voting. This brief overview shows that the key issue in peace theory is how credible commitments can be made by the negotiators. This is not the way the main peacebuilding institutions understand their mission, and international bureaucracies tend to implement fairly different protocols. The chapter then discusses two prominent themes in the standard peacebuilding strategy that call for second thoughts, namely disarmament and the jump to democracy, as embedded in elections organized as soon as possible. Three fairly successful post-conflict cases are then presented, showing that their successes were based on innovative solutions aimed at enabling the new governments to make credible commitments about their policies, sidestepping the standard protocols. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131242 |
| By: | Colvin, Christopher L.; Fourie, Johan |
| Abstract: | We define applied economic history as the systematic use of historical reasoning to address economic policy problems. Building on work in applied history, we argue that economic history contributes to policy not by offering ready-made lessons, but by disciplining the narratives and analogies that policymakers and the public use. Unlike conventional economic history, which begins with a past episode and asks explanatory questions, an applied approach starts from a current problem and works backwards to identify relevant historical parallels. Selecting cases, however, is only the first step: their policy relevance depends on the narratives through which they are interpreted and put to use. We synthesise work from narrative economics, organisational history, and media and memory studies to clarify how historical narratives are conceptualised as shaping beliefs and behaviour, but also how they mislead when stripped of context. Applied economic history therefore requires careful narrative construction, standards for comparison, attention to difference as well as similarity, and transparency about uncertainty. We conclude by outlining how changes to training, incentives, and institutions could support engagement by economic historians with policymaking. |
| Keywords: | applied economic history, analogical reasoning, policymaking, narrative economics |
| JEL: | B41 D78 H11 N01 Z13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:qucehw:335019 |