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on Post Keynesian Economics |
| By: | Yeva Nersisyan; L. Randall Wray |
| Abstract: | This paper examines the rise of the plutonomy--an economy dominated by the new plutocrats--and compares it with the Gilded Age of the 1920s. We show how John Kenneth Galbraith’s analysis in his classic, The Great Crash, offers insights into our current predicament. The financing used by the investment trusts that pumped up the stock market then looks eerily similar to the circular finance used by today's tech firms that dominate the equity market today. The assets held by those trusts were the stocks and debts of other trusts--just as our tech firms owe and own each other today. That ensures that when liquidation of positions begins, a Fisher-type debt deflation dynamic will take hold. Furthermore, just as the economy of the late 1920s relied on the spending of the rich, today's record level of inequality means that the economy must rely excessively on the investment spending of the Magnificent Seven and consumption spending of the millionaires, billionaires, and trillionaires minted by the boom of their share prices. Galbraith explained how FDR’s New Deal reconstructed the economy so that its growth relied on mass consumption supported by greater income equality, by reigning-in finance, and by creating a bigger role for government. We warn that government is ill-prepared to deal with the coming financial crisis and we offer alternatives to the strategy adopted to deal with the Global Financial Crisis. |
| Keywords: | The Great Crash; Plutonomy; Artificial Intelligence; Magnificent Seven; financial crisis; Minsky; Money Manager Capitalism |
| JEL: | B15 B25 B26 B52 E12 E32 E44 E62 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1122 |
| By: | Simon Fløj Thomsen |
| Abstract: | This paper reviews the development of Ecological Stock-Flow-Consistent Input-Output models as an emerging alternative to mainstream climate-economy modelling frameworks. In light of the limitations of neoclassical approaches, which rely on restrictive behavioral and equilibrium assumptions, Ecological Stock-Flow-Consistent Input-Output models offer a coherent framework to analyze climate policies by jointly representing financial dynamics, the real economy, and ecological pressures within a stock-flow-consistent dynamic setting. After introducing the Stock-Flow-Consistent and input-output traditions separately, the paper explains how these approaches can be integrated and discusses the implications of disaggregating the production sector into interdependent industries. The existing Ecological Stock-Flow-Consistent Input-Output literature is then surveyed, with particular attention to the treatment of financial linkages, inter-industry relations, environmental extensions, and the calibration strategy. An important finding is that, while the models become more complex in both the production, financial and ecological interactions, most of the models remain theoretical or calibrated, with weak empirical foundation. The paper therefore evaluates the potential of Ecological Stock-Flow-Consistent Input-Output models as tools for climate policy analysis and argues for a shift of focus towards fully empirical implementations. Finally, it identifies key methodological and data-related challenges that must be addressed for Ecological Stock-Flow-Consistent Input-Output models to become robust and reliable components of the climate policy toolkit. |
| Keywords: | Empirical Stock-Flow-Consistent models, Environmentally Extended Input-Output modelling, Ecological macroeconomics |
| JEL: | E12 E17 F41 L16 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:imk:fmmpap:123-2026 |
| By: | Mark Setterfield (Department of Economics, New School for Social Research, USA); Christopher R. Herdelin (Department of Economics and Finance, Saint Peter's University, USA) |
| Abstract: | In this paper, we present an alternative to the conventional view regarding the Goodwin pattern. We demonstrate that the Goodwin pattern emerges from a three-dimensional system of real, monetary, and distributional dynamics where the monetary linkage includes a central bank incorporating an asymmetric reaction function. The asymmetric reaction function is the result of a central bank that is inflation averse resulting in a deflationary bias. Therefore, the central bank sets interest rates in response to variations in the wage share and real activity, however, there is no influence of distribution on real activity. In our model, the central bank reaction function reflects implicit inflation targeting in real activity × wage share space responding to goods market and labour market pressure. In other words, the central bank finds itself in a conflicting claims environment, changing interest rates when either output or the wage share deviate from their target values. Our results show that the introduction of the central bank reaction function with a deflationary bias produces the cyclical behavior associated with the Goodwin pattern, but more importantly, it also demonstrates a weakening of the profit squeeze mechanism and a secular decline in the wage share. |
| Keywords: | Goodwin pattern, central bank, reaction function, cyclical growth |
| JEL: | E11 E12 E32 E37 E43 E58 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2608 |
| By: | Thomas Palley |
| Abstract: | This essay is about the polycrisis, whereby the global order is afflicted by simultaneous crises impacting economics, politics, societal relations, geopolitics, and nature. The essay uses the metaphor of “bad apples” versus “bad barrel” to explain the argument. The “bad apples” explanation views the polycrisis as a series of idiosyncratic crises, and it leaves the free market ideal intact and absolves capitalism. The “bad barrel” explanation sees the polycrisis as being systemically produced, and it contests the free market ideal and identifies capitalism as the driving cause. The Neoliberal era (1980 – present) has surfaced the polycrisis, and the crisis openly revives Luxemburg’s question of “socialism or barbarism?” There is much to be done if society is to avoid a repeat of barbarism. That includes persuasively explaining capitalism’s flaws, articulating the future of socialism, and breaking the chokehold on politics that blocks surfacing these issues. The Chinese proverb is “A journey of a thousand miles begins with a single step.” That is true, but we should also seek to ensure the first step is in the right direction. Acknowledging the polycrisis and recognizing it is a product of capitalism’s “bad barrel” does both. |
| Keywords: | polycrisis, capitalism, noeliberal, socialism |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:imk:fmmpap:125-2026 |
| By: | Eric Tymoigne |
| Abstract: | Following the 2008 financial crisis, the US entered an economic environment characterized by low interest rates, cautious banks, and tighter financial regulations. As a consequence, businesses that were too small to issue securities faced a credit crunch while money managers were on the hunt for higher yielding assets. Private markets that have existed for decades have provided a solution to that double problem by offering to channel funds provided by money managers into credit-constrained businesses. As of 2025, private equity funds hold $24 trillion worth of assets globally (Edlich et al. 2026, 24) and private debt funds have $2.6 trillion of assets under management (Hinds et al. 2026, 5). While there have been recent worries about developments in private debt markets, regulators and private equity firms have been quick to brush these worries aside, arguing that the private debt market is small, private debt deals have a lot of equity buffer (leverage is low), covenants attached to private debt deals allow for a quick correction of problems in a way that promotes the long-term success of businesses, and low default rates reflect the inherent soundness of private markets. Instead, private capital firms and regulators have pushed for "democratizing" private markets by "unlocking broader access to sophisticated strategies that were once out of reach for everyday savers" (CEO of Great Gray Trust Co., in Bodamer [2025]) in order to use dormant savings in banks to "channel them into productive investments." |
| URL: | https://d.repec.org/n?u=RePEc:lev:levypn:26-4 |
| By: | Drakopoulos, Stavros A.; Katselidis, Ioannis |
| Abstract: | This work discusses the role of psychology in the Post War II non-mainstream economics tradition, focusing on George Katona, Harvey Leibenstein and Tibor Scitovsky. Although those three authors were largely ignored by orthodox economists, they exercised a considerable influence on heterodox schools and helped to establish the foundations of behavioural economics and of the economics of happiness. Katona started a research programme at the Survey Research Center of the University of Michigan, which was openly based on the economic psychology of the attitudes and motives underlying market behaviour. Initially, he focused on the psychological aspects of business behaviour in order to explore the motives and attitudes of businessmen. Subsequently, Katona’s studies were centred on the psychological aspects of consumption, suggesting the use of interview surveys to obtain both financial and attitudinal data of consumers. Leibenstein is considered to be one of the first economists to explore issues pertaining to what is called today behavioural economics. Anticipating modern or new behavioural economics, Leibenstein incorporated the psychological dimensions of economic behaviour into his microeconomic approach long before the emergence of behavioral economics as a distinct discipline. Scitovsky was among the first economists to detect a new-found interest in the determinants of well-being and in its underlying processes in psychological research, and to show how economics could be enriched by applying the new psychological insights. All three were clearly against the purging of psychology from twentieth century economic theory, arguing that incorporating concepts and findings from psychology into economics was methodologically legitimate and theoretically fruitful. The paper will also discuss their critical attitude towards the standard model of economic rationality and the mainstream methodological framework. Further, it will investigate key common points of these authors, including their emphasis on the role of interdependent preferences. |
| Keywords: | History of Heterodox Economics; Relation between Economics and Psychology; History of Old Behavioral Economics; History of Happiness Economics |
| JEL: | A12 B2 B3 B4 B50 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129729 |
| By: | Claudius Gräbner-Radkowitsch (Department of Plural Economics, Europe University Flensburg, Germany; Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Socio-Ecological Transformation Lab, Johannes Kepler University Linz, Austria) |
| Abstract: | Socio-ecological transformations present regions with the challenge of moving away from established trajectories towards uncertain alternatives. This paper argues that the original institutional economics (OIE) tradition provides powerful yet underused tools for understanding these processes. It demonstrates that classical concepts such as the institutionalist conception of habits and institutions, ceremonial encapsulation, and path dependence remain analytically valuable, despite having been developed under different socio-historical conditions. Building on this foundation, the paper extends the concept of relatedness beyond its established technological meaning to encompass cognitive and institutional dimensions. This extended concept helps explain not only why existing trajectories persist but also which pathways actors are positioned to pursue, thereby clarifying the feasibility of transformation. These arguments are illustrated through the case study of the Lusatian coal region in Germany, drawing on semi-structured interviews with regional stakeholders. The analysis demonstrates how cognitive and institutional relatedness collectively shape the accessible space of transformation. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:set:wpaper:7 |
| By: | Alan, Sule |
| Abstract: | This chapter examines how schools cultivate socio-emotional skills that influence both individual success and broader social cohesion. Moving beyond the traditional focus on cognitive ability, I argue that education plays a crucial role in fostering traits that promote cooperation, trust, and long-term societal well-being. Drawing on insights from neuroscience, psychology, and economics, I explore how schools shape not only academic and labor market outcomes but also intergenerational beliefs, attitudes, and the formation of social capital. Using evidence from experimental studies, I highlight how school-based interventions can instill perseverance, enhance social learning, and create environments that curb anti-social tendencies, promote prosocial behavior—ultimately influencing the cultural fabric of society. This perspective reframes education as a mechanism for building more equitable and cohesive communities. |
| JEL: | C93 D63 I24 I25 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21289 |