Post Keynesian Research Articles

New and Classical Developmentalism compared: a response to Medeiros

New Developmentalism, which Carlos Medeiros (2020) criticizes, is a new theoretical approach to development macroeconomics and the political economy of middle-income countries. It is a system of thought whose roots are in Post-Keynesian economics and Classical Developmentalism, but it is an open and growth-oriented approach. This paper summarizes the new theoretical framework. Thereafter, it responds to the indictments that New Developmentalism is neither a Post-Keynesian nor a developmental theory, but rather an expression of the ‘market failure approach,’ ‘methodological nationalism,’ the ‘mistaken’ association of exchange-rate economic growth, etc. The paper then argues that New Developmentalism is a system of thought that responds to the new realities of the globalized world and compares New Developmentalism with Classical Developmentalism.

‘If you are convinced that post-Keynesian economics is a good way of thinking, get on with it’: Interview with Victoria Chick

‘If you are convinced that post-Keynesian economics is a good way of thinking, get on with it’: Interview with Victoria Chick

Welfare models and demand-led growth regimes before and after the financial and economic crisis

Connecting comparative political economy (CPE) approaches, as the Varieties of Capitalism (VoC) theory, with post-Keynesian (PK) research on different demand and growth regimes in modern capitalism has recently given rise to some interesting claims regarding differentiation and shifts of demand and growth regimes. However, we find some difficulties in the way PK approaches have been interpreted and integrated in modern CPE approaches. Therefore, we first provide a theoretically consistent and empirically applicable classification of demand and growth regimes under the conditions of finance-dominated capitalism, as it recently has been proposed by PK authors. Second, instead of using the traditional VoC dual classification, we focus on a more differentiated welfare model classification, which can be seen as different socio-institutional responses towards the challenges of globalisation and financialisation. For the period before the 2007-9 crisis, we link the PK demand and growth regimes with five socio-economic models identified by Hay and Wincott (2012), and thus provide an alternative approach. Third, going beyond the current debate, we examine the regime shifts after the 2007-9 global crisis with respect to the demand and growth regimes, and we also examine the changes within the welfare models. Whereas we find a clear pattern for the shift of demand and growth regimes, the changes in the welfare models are not as clear-cut.

Was Hyman Minsky a post-Keynesian economist?

As the subprime financial crisis erupted in 2008, Wall Street analysts started talking of the Minsky moment. Hyman Minsky’s out-of-print 1986 book, Stabilizing an Unstable Economy, would then sell for hundreds of dollars on the internet, until it was reprinted. The paper recollects the main features of Minsky’s financial instability hypothesis that became so popular in the aftermath of the failure of Lehman’s Brothers despite having been totally ignored by mainstream economists until then. It also recalls other important contributions of Minsky to our understanding of a monetized production economy, some of which were quite premonitory. In the second part of the paper, the author mentions what can be considered as weaknesses of Minsky’s theoretical framework, which should be avoided in future work. The third part deals with the controversial issue of whether or not Minsky was a post-Keynesian, or considered himself to be part of the post-Keynesian school of thought. The author concludes that indeed Minsky clearly stood in the post-Keynesian camp.

Economic theory and institutions

Economic theory and institutional approaches lack a close connection. Efforts to develop an analysis of institutions within a neo-classical framework have shown serious limitations. A stronger relationship could be developed with classical and post-Keynesian economics, that provides the conditions for developing a unified theoretical framework in which to place the economic analysis of social institutions.

Why does the history of economic thought neglect Post-Keynesian economics?

Despite receiving increased interest after the global financial crisis of 2007–2008 and consolidating itself as an established research program, Post-Keynesian economics remains under-represented within publications on the history of economics. When compared to other traditional heterodox approaches such as Marxist, Institutionalist, and Austrian economics, Post-Keynesian economics falls behind considerably, contradicting the Post-Keynesian appreciation for the history of the discipline. This article explores some reasons behind this detachment by considering two main factors: first, the recent disciplinary and institutional changes experienced by the history of economics in the last ten years; and, second, the recent ‘maturing state’ of Post-Keynesian economics and its unique treatment of the history of economic thought. The article concludes by suggesting a new research agenda for Post-Keynesianism, making use of the ‘applied’ turn proposed by the recent history of economic thought as one of the strategies for Post-Keynesians to engage with the economics discipline.

A Consensus on Taxing the Rich? Comparing Mainstream Economics, Piketty and Post-Keynesian Economics

Over several decades, income has become increasingly concentrated at the top of the distributional pyramid in many rich countries. Raising taxes on top income earners and top wealth owners has gained traction in many policy circles as a way to reverse this inequality surge. This paper examines the views of mainstream economists, Thomas Piketty and Post-Keynesian economists concerning the impact of taxation and optimal tax policy. We show that, in terms of taxing the rich, these three perspectives have a great deal in common, but there are also many disagreements. We argue that Piketty occupies a middle ground between mainstream and Post-Keynesian economics, and there is a good deal that Piketty and these two schools can learn from one another.

Kaldor 3.0: An Empirical Investigation of the Verdoorn-augmented Technical Progress Function

ABSTRACT Consistent with neoclassical theory, the recent slowdown in labour productivity is generally regarded as one of the main causes of the current phase of economic stagnation. By contrast, post-Keynesian economics looks at productivity growth as positively affected by the rate of growth of output in the long run as well. By focusing on this alternative perspective, in our exploration we deal with an extended version of the Kaldorian technical progress function in which the trend growth rate of productivity is endogenously shaped by the dynamics of both output and capital−labour ratio. We empirically verify such a relationship for the total economy and the manufacturing sector through a structural vector autoregressive (SVAR) model for G7 countries (1970–2017). Our findings support the validity of a technical progress function, which admits increasing returns to scale, thus indicating that both the rate of growth of output and the process of capital intensification exert positive effects on productivity growth, even beyond the business cycle.

Liquidity Preference, Capital Accumulation and Investment Financing: Fernando Cardim de Carvalho’s Contributions to the Post-Keynesian Paradigm

ABSTRACT This paper assesses the main theoretical contributions by Fernando Cardim de Carvalho to the post-Keynesian Economics Paradigm: his elucidation of the fundamental principles that define the concept of a monetary production economy; his analysis of decision-making under non-probabilistic uncertainty; his development of a portfolio choice theory in which the decision to invest is regarded as one of possible wealth accumulation strategies; his liquidity preference theory, including its application to banks’ portfolio allocations under uncertainty; and finally his analysis of the finance-funding circuit and its implications for the functioning of monetary economies.

The State of Post-Keynesian Economics and its connections with other heterodox perspectives

The State of Post-Keynesian Economics and its connections with other heterodox perspectives

MR. CARVALHO AND THE POST-KEYNESIANS: SCHOLAR, THEORIST, WRITER

ABSTRACT Fernando Cardim de Carvalho’s monumental intellectual legacy encompasses many elements - his teaching, his mentoring, his scholarship, and his policy activism. This essay explores Cardim’s contributions to Post-Keynesian economics through the lens of his 31 publications in refereed English-language journals. After applying some bibliometric analysis to these articles, we undertake a chronological review of the themes developed in Cardim’s publications on theoretical topics in Keynesian economics. This is followed by a clarification and defense of Cardim’s distinctive methodology. We then undertake a chronological review of the articles containing his critical analyses of development policy. This side-by-side comparison of Cardim’s theoretical and policy pre-occupations through time clarifies their close interconnection. We conclude by examining the craft of writing in Cardim’s work, as he was an economist whose impact stemmed not just what he said, but from how he said it. Seeing Fernando Cardim de Carvalho’s scholarship from these different angles - his multidimensional contributions as a scholar, as a theorist, a critic, and as a crafter of prose - permits a full appreciation of both the range and depth of his work as a Keynesian economist.

Introducing minimum wages in Germany employment effects in a post Keynesian perspective

The long ongoing discussion about the employment impact of minimum wages was recently reinvigorated with the introduction of an economy-wide, binding minimum wage in Germany in 2015. In the traditional line of reasoning, based on the allocational approach of modern labor market economics, it has been suggested that the impact is clearly negative on the assumption of a competitive labor market and clearly positive on the assumption of a monopsonistic labor market. Unfortunately, both predictions conflict with the empirical findings, which do not show a clear-cut impact of significant size in either direction. As an alternative, a Post Keynesian two-sector model including an employment market is presented here. Its most likely prediction of a negligible employment effect and a sectoral shift is tested against the German case of an introduction of a statutory minimum wage in 2015. Despite substantial wage increases in the low wage sector, our empirical analysis reveals very low overall employment loss, amounting to about 26,500 workers, as a result of a small sectoral shift from low wage industries to higher wage industries.

Firm innovation and capitalist dialectics: The economics of Nina Shapiro

AbstractThis essay is a review of and tribute to the life and contributions of Nina Shapiro, who passed away this year. Shapiro was an American Post-Keynesian economist, who was a bridge figure in radical economics, connecting Marx to Keynes, Schumpeter to Kaldor, the behavior of the firm to the dynamics of the macroeconomy, and the process of innovation to the organization of production and accumulation. She was seminal to important moments in the history of radical economics in the US, including the formation of the Hegel-inspired journal Social Concept in the 1980s and the Rutgers University’s Post-Keynesian circle in the 1980s and 1990s. Shapiro’s deeply philosophical and dialectical approach to firm behavior, innovation, and business cycles led her to theorize the “revolutionary character” of Post-Keynesian economics and to formulate a critique of the competitive neoclassical firm which, she argued, is at odds with the logic of capitalism in which firms seek to make profit and grow.

A note on “zero growth and structural change in a post Keynesian growth model”

This note is a critique of the results found by Rosenbaum concerning zero growth and structural change in a post-Keynesian growth model, some of which are shown to be problematic. First, the (im)possibility for a neo-Kaleckian model of growth and distribution to generate a profit-led growth regime is discussed. Next, we review the role played by the “paradox of costs” when introducing the depreciation of capital and how this changes the stability characteristics of the model presented by Rosenbaum. Finally we show that, contrary to what is claimed in the article, the proposed model is not able to show that zero growth is compatible with a positive net rate of profit.

Türkiye’nin Talep Rejimi: Post-Keynesyen Ekonometrik Bir Analiz

Bu çalışmanın amacı emek ve sermaye arasındaki gelir dağılımının Türkiye’nin büyüme potansiyelini nasıl etkilediğini Post-Keynesyen bir açıdan incelemektir. Bu doğrultuda çalışma Bhaduri ve Marglin’in (1990) geliştirdiği model temelinde Naastepad’ın (2006) ampirik yaklaşımı aracılığıyla 1998-2019 yılları arasında çeyrek dönemlik veriler yardımıyla Türkiye’nin talep rejimini tahmin etmektedir. Bu çalışmanın sonuçlarına göre adı geçen zaman aralığında talep rejimi ücret çekişli bulunmuştur. Diğer bir deyişle ücret paylarındaki artıştan kaynaklanan tüketim harcamalarındaki genişlemenin büyüme üzerindeki olumlu etkisinin, yatırım ve ihracat üzerindeki daraltıcı etkisinden büyük olduğu tespit edilmiştir. Bu ampirik sonuçlar temelinde emek yanlısı iktisat politikalarının ekonomik büyümeye olumlu katkıda bulunacağı ileri sürülmüştür.

Monetary policy in the unique growth cycle of post Keynesian systems

This paper deals with the following two issues in a post Keynesian system: the existence and uniqueness of a growth cycle and the effectiveness of a counter-cyclical monetary policy for stabilization. It is found that the unique growth cycle, represented by the unique limit cycle, can be observed if the rate of interest is set to a constant level while that the long-run equilibrium can be globally asymptotically stable if an appropriate counter-cyclical monetary policy is conducted.

Income Distribution, Consumption, and Economic Growth in Italy

The paper discusses Modigliani, Brumberg, and Ando’s life cycle hypothesis and its difficult acceptance in Italy over the 1960s and 1970s. The increasing attention to the effects of income redistribution on consumption coupled with the strong influence that post-Keynesian economics exercised on the theoretical and political debate of that time led to a widespread preference of Kaldor’s theory as over the life cycle as the best representation of Italian savings behavior.

Relationship between Korean Manufacturing Wages and Labor Productivity

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.

Feminist and stratification theories' lessons from the crisis and their relevance for post-Keynesian theory

The many contributions of post-Keynesian economists to understanding the causes of the global financial crisis that began in 2008 could be enhanced by integrating the research by feminist and stratification economists. These groups have produced a body of work analysing trends in inter-group and intra-class inequality that led up to the crisis and theoretically inform how we assess the distribution of the negative effects of the crisis by class, race, and gender. Further, this body of work has assessed the potential for fiscal and monetary policy to promote greater equality while reducing intra-class competition and conflict.

From classical developmentalism and post-Keynesian macroeconomics to new developmentalism

ABSTRACT New developmentalism was a response to the inability of classical developmentalism and post-Keynesian macroeconomics in leading middle-income countries to resume growth. New developmentalism was born in the 2000s to explain why Latin American countries stopped growing in the 1980s, while East Asian countries continued to catch up. This paper compares new developmentalism with classical developmentalism, which didn’t have a macroeconomics, and with post-Keynesian economics, whose macroeconomics is not devoted to developing countries. And shows that to follow the East Asian example is not enough industrial policy, it is also necessary a macroeconomic policy that sets the five macroeconomic prices right, rejects the growth with foreign savings policy, and keeps the macroeconomic accounts balanced.