How Progressive Is Post-Keynesian Economics?

One topic on which Keynes did not disagree with classical economists was the cyclical behavior of real wages. Keynes (1936) as well as various classical writers predicted that real wages should move countercyclically. Quoting the General Theory (p. 17): "in general an increase in employment can only occur through the accompaniment of a decline in real wages. Thus, I am not disputing this vital fact which the classical economists have (rightly) asserted as indefeasible." This prediction is based on the premise of competition and a given short-run capital stock. Increases in employment then correspond to more intensive use of capital and, through diminishing product, lower real wages. For this reason, evidence by Dunlop (1938) and Tarshis (1939) that real wages move procyclically was viewed as paradoxical. Both Dunlop and Tarshis based their findings on an observed positive correlation between real and money wages, which, given the procyclical movement of money wages, implies a positive correlation between

On the Character and Causes of Inequality in Latin America

This paper analyzes if there was a transmission from the policy of real minimum wage adjustments undertaken in Brazil from 1995 to 2016 to consumer inflation. The literature that grounds the analysis is post Keynesian economics. To measure the impact of the minimum wage appreciation policy on inflation, the econometric strategy consisted of the VAR (Vector Autoregression) method. The study researches the Brazilian economy between 2003 and 2016, as this was the period in which the policy occurred. The empirical results indicate that the real readjustments of the minimum wage passed to inflation, but the value of this transmission was small.

An Exposition and Exploration of Krueger's Trade Model

외환위기 이후 악화되기 시작한 한국 제조업의 노동소득분배율은 2010년 이후에 소폭 개선되었는데 그 주요인은 실질임금 상승이 아닌 노동생산성 둔화이다. 노동생산성이 임금을 결정한다는 주류 경제학의 가정과는 달리 포스트케인스주의 생산성체제 분석은 임금 상승이 노동생산성 향상으로 이어질 수 있다고 주장한다. 본 연구에서는 임금과 생산성의 관계에서 양방향의 상호관계가 있음을 전제하고 고용(총노동시간)의 변화에 주목하면서, 노동생산성 증가율과 임금 증가율의 상호 작용에 대해 분석한다. 노동생산성, 고용(총노동시간), 임금 사이의 관계를 패널벡터자기회귀 모형으로 실증한 결과 임금상승이 노동생산성 증가를 통해 다시 임금 상승으로 이어지는 선순환 고리가 2010년 이후 한국 제조업에서 다소 약화되었고, 임금 상승이 노동생산성을 증가시키는 효과가 그 반대의 경우보다 클 수 있음을 보여준다. 다만 임금 상승이 노동생산성을 증대시키는 효과는 존재하지만 고용(총노동시간)을 감소시키기 때문에 그 효과는 반감될 가능성이 있다. 따라서 혁신의 유인을 감소시키지 않으면서 일자리 대체를 최소화하는 정부의 조정 능력이 요구된다. 시스템 일반화 적률법을 사용하여 한국 제조업 노동생산성의 결정요인을 분석한 결과 역시 시간당 임금은 제조업 노동생산성 증가율에 정(+)의 효과를 보이는 것으로 나타났다.Income inequality in Korean manufacturing sector began worsening since the East Asian economic crisis in 1997. Although it has been slightly improved after 2010, this improvement is not due to the enhanced real wages, but due mainly to the slowdown of the labor productivity. Mainstream and post-Keynesian economics show two conflicting views on the relationship between wages and labor productivity: the latter determines the former according to the mainstream economics, and vice versa according to the post-Keynesian economics. In this study, assuming the existence of two-way interactions between the two variables, we investigate the relationship among the change of the labor productivity, the change of the real wages, and the change of the employment using a 3-variables panel vector autoregression method. Among the results of an empirical analysis, it is noteworthy that the positive impact of wage growth on labor productivity growth is much greater and significant than that of the reverse, which can imply the possibility of a restored virtuous circle between wages and productivity through that channel. However, it is also noteworthy that employment responds negatively to changes in wages and productivity, which can be ascribed to the rapid application of automation in the production process. The government should implement a policy supporting the creation of decent jobs in new industries to minimize the negative externalities of workforce redundancy. We adopt a System GMM method to investigate the determinants of the Korean manufacturing labor productivity. The result also show that the hourly wage is positively related to the labor productivity.

This paper studies the effects of geopolitical risks and uncertainty on real wages. Employing UK data from 2000: Q1 to 2022: Q2 and a partial Nonlinear‐Autoregressive Distributed Lag (NARDL) framework, we find that war‐associated geopolitical risks and uncertainty have a statistically significant though mild positive impact on real wages. We find that domestic factors including economic policy uncertainty, productivity, economic growth, unemployment, inflation expectations and unionization play a stronger role in affecting real wages. Our findings suggest that the direct effects of war‐associated geopolitical risks and uncertainty on real wages are temporary. From a policy perspective, the course of real wages will depend more on inflation expectations, productivity and most importantly unionization. We conclude that if real wages in the UK are to rise on a consistent basis then workers and particularly unions will have to gain more bargaining leverage.

This paper reveals the important micro role of the price-wage control policies at the early stage of the liberalization in the adjustment of the transitional economy. It demonstrates that with labor immobile at the initial stage of the liberalization a strict control on the price of the non-tradables and the wage rate could minimize the fall in employment and production in the contracting manufacturing sector. Furthermore a more severe control on the price of the non-tradables than on the wage rate is preferred since it alleviates the fall in the real wage at negligible costs in lost employment and output. As the labor market develops and labor becomes mobile between regions and industries the price-wage controls should be phased out. The liberalization of the price of the non- tradables should proceed faster than that of the wage rate since a low real product wage in the non-tradable goods sector is essential to induce more employment and output in this expanding sector. The rest of the paper is organized as follows. The rationale behind price-wage control policies is discussed in section 2. Section 3 presents the model and the theoretical analysis. The simulation analysis is presented in sections 4. Section 5 summarizes the findings of the study. The complete definition of certain parameters are presented in the Appendix. (excerpt)

Our purpose is to evaluate the impact of the economic and social policies of Chile's military junta on the well-being of the majority of chilenos, especially those of the lowest income level. The exercise consists of a simple comparison of income and expenditure levels between those of the last months of the Unidad Popular (UP) government and those of October 1974. We have chosen the 1968–69 average as a basis of comparison for two reasons. First, in practical terms, the Dirección de Estadística y Censos (DEC) conducted a survey on consumption expenditures for different income groups for that period, and it is the most recent one available. Second, in the days prior to the coup there was general agreement among economists, both in the government and in the opposition, that the average standards of living were equivalent to those of 1968–69. In effect, according to the Taller de Coyuntura, real wages during the first eight months of 1973 were 98.8 percent of their levels in January 1970. Since this index of real wages is based on January 1970, and our basis of comparison is 1968–69, we can assert that in the last months of the Unidad Popular government (January-August 1973) real wages were at least equal to, if not higher than, those of 1968–69. We should emphasize that the Taller de Coyuntura was a vocal stronghold of forces opposed to the government of Salvador Allende. In addition, a comparison of the Consumers' Price Index, published by the Banco Central de Chile, indicates that real wages increased between 1970 and July 1973. A somewhat more favorable picture would have come out of studies conducted at the now defunct Instituto de Economía Política y Planificación (Facultad de Economía Política, Universidad de Chile), which indicated that between July and August 1973, real wages were back to their September 1970 level. The gains of the first two years of the Unidad Popular—especially for the lowest income groups—had been lost due to government mistakes and as a result of the sabotage and destabilization campaigns that started 5 September 1970 and culminated with the bloody coup of 11 September 1973. Hence even though we are using 1968–69 as a proxy, we are actually comparing real income in October 1974 with that of the final months of the government of the Unidad Popular.

Once the economy operates at a level of employment below full employment, then comes an internal market structure that responds and eliminates the gap. However, if this offer is higher than the need for labor, the net market return will be above its equilibrium point, in other words, overloading the economic mechanisms that eliminate some excess in the labor market. So, in a scenario of unemployment, the large number of workers available in the market in relation to the number of vacancies promotes a decrease in real wages in the market, once the competition and oversupply of manpower they promote this panorama. The reduction in the real market wage is an event that occurs permanently until it runs out excess labor available. Right now, the job market becomes balanced to achieve full employment in an economy. This article therefore aims to present a theoretical discussion based on contributions Policy Administration Keynesian Policies for ensuring full employment. In this research it was concluded that government intervention is needed to achieve and maintain full employment, as well as demonstrating the potential of economic policies in this context. Thus, it is understood that the study contributes to the theoretical reference on this issue.

Twenty-one papers explore approaches and issues in post-Keynesian economics, with a special focus on critiques and methodology. Papers discuss the microfoundations of macroeconomics; post-Keynesian economics, rationality, and conventions; methodology and post-Keynesian economics; post-Keynesian perspectives on some philosophical dimensions of John Maynard Keynes's economic thinking; two post-Keynesian approaches to uncertainty and irreducible uncertainty; interdisciplinary applications of post-Keynesian economics; post-Keynesian economics, critical realism, and social ontology; the traverse, equilibrium analysis, and post-Keynesian economics; a personal view of post-Keynesian elements in the development of economic complexity theory and its application to policy; how sound are the foundations of the aggregate production function?; Karl Marx and the post-Keynesians; macroeconomics and the L-shaped aggregate supply curve; a post-Keynesian perspective on the rise of central bank independence—a dubious success story in monetary economics; the post-Keynesian critique of the mainstream theory of the state and the post-Keynesian approaches to economic policy; a modern Kaleckian–Keynesian framework for economic theory and policy; post-Keynesian principles and economic policies; post-Keynesian distribution of personal income and pay; environmental economics and policy; theorizing about post-Keynesian economics in Australasia—aggregate demand, economic growth, and income distribution policy; the neoclassical sink and the heterodox spiral—why the twin global crisis has not transformed economics; and Keynesianism and the crisis. Harcourt is Emeritus Reader in the History of Economic Theory and Emeritus Fellow in Jesus College at Cambridge University and Professor Emeritus at the University of Adelaide. Kriesler is Associate Professor in the School of Economics at the University of New South Wales.

Real wage rigidities and optimal monetary policy in a small open economy

Samuelson’s Neoclassical Synthesis Did Not Betray Keynes: Keynes Had Offered Just Such a Synthesis in the General Theory, As Well As to Hicks and Harrod in Correspondence, in 1936

Understanding the impact of economic factors on bank lending is crucial in Kazakhstan’s modern economy, characterized by volatile inflation and fluctuations in real wages. This paper aims to investigate the link between bank lending and economic factors such as inflation, real wages, and consumer expenditure in a regional context. Data from the Bureau of National Statistics and the National Bank, covering the period from 2012 to 2022, were used to uncover how economic factors influence bank lending. For the analysis, various economic indicators were integrated through normalization and averaging. Analysis reveals significant regional disparities in real wages and consumer expenditures, which impact the demand for bank credit. The results of the correlation matrix showed that both real wages (P-value < 0.001) and inflation (P-value < 0.001) significantly impact bank lending, with an R² value of 0.998, indicating that the model explains 99.8% of the variation in bank lending. The regression analysis highlights that regions with higher real wages, such as Astana, Almaty, and Atyrau, provide the most favorable conditions for banking sector growth, demonstrated by a strong relationship between wages and bank lending. In contrast, regions with lower wage levels, such as Turkestan and Zhambyl, show a significantly weaker connection (around 0.65), reflecting their lower attractiveness for banking investment and emphasizing the need for policies to address social inequality. The Durbin-Watson test confirmed no autocorrelation in residuals (DW = 1.89), although heteroscedasticity was detected, suggesting the need for further model adjustments. The study emphasizes the importance of developing economic policies that can balance regional development and improve financial stability. AcknowledgmentsThis research has been funded by the Science Committee of the Ministry of Science and Higher Education of the Republic of Kazakhstan (Grant “Development of mechanisms for reducing social inequality and improving the welfare of the population of Kazakhstan” AP19174744).

Canadian and U.S. unemployment rates moved together within a narrow margin from 1961 to the mid‐1970s. Since then, Canadian rates have exceeded U.S. rates by large margins—at times as much as 3 percentage points. Throughout this period, interest rates in the two countries have been nearly identical. Aggregate demand stimulation by government deficits has been greater in Canada than in the U.S., and the trade surplus in Canada has added to demand while the trade deficit in the U.S. has subtracted from demand. Therefore, it seems that conventional Keynesian arguments cannot explain the recent differences in unemployment rates.Differences in labor market developments, however, can do so. During a period when real wages rose 35 percent in Canada, they fell 5 percent in the U.S. Since the recession of 1981, U.S. wages have dropped while Canadian wages have remained constant. Differences in labor productivity do not account for these developments. A strong case exists for the argument that the different paths of unemployment rates are due to different paths of real wage developments.It is argued that the causes for these differences in labor market conditions are associated with substantial growth and decreases in unionization rates in Canada and the U.S., respectively. In addition, the unemployment insurance system in Canada is shown to be considerably more generous than that in the U.S.

The governments of developing countries are constrained in the effective implementation of domestic policy by the interlinkages of national and international financial markets. Domestic macroeconomic conditions are influenced by the interaction of national and world interest rates and prices, and through the impact of real exchange rates on employment. The domestic responses to changes in these factors are often strong and rapid. This article suggests that dual rates can indeed be used successfully as a strictly transitory policy to offset sudden shocks in capital markets. The article develops models which indicate why these dual systems are able to prevent inflationary or recessionary pressures caused by a misaligned exchange rate in the short term. While free capital account rates can cut the flow of capital flight, however, a dual rate system cannot prevent a possibly equivalent loss of foreign reserves that will ultimately result because of the impact of the overvaluation of the commercial rate on the trade balance. In the longer term, a dual rate system with a misaligned commercial rate exacerbates the government's deficit; ultimately, real wages must be cut and real interest rates raised to generate sufficient foreign exchange to finance the external debt. Thus a dual rate works well if the commercial rate is maintained close to the equilibrium level.