This paper incorporates human capital accumulation through provision of universal public education by a balanced-budget government to a demand-driven analytical framework of functional distribution and growth of income. Human capital accumulation positively impacts on workers’ productivity in production and their bargaining power in wage negotiations. In the long-run equilibrium, a rise in the tax rate (which also denotes the share of output spent in human capital formation) lowers the pre- and after-tax wage share and physical capital utilization, and thus raises (lowers) the output growth rate when the latter is profit-led (wage-led). The impact of a higher tax rate on the employment rate (which also measures human capital utilization) in the long-run equilibrium is negative (ambiguous) when output growth is wage-led (profit-led). In any case, the supply of higher-skilled workers does not automatically create its own demand.
{"title":"Human capital accumulation, income distribution, and economic growth: a demand-led analytical framework","authors":"Gilberto Tadeu Lima, L. Carvalho, G. Serra","doi":"10.4337/ROKE.2021.03.02","DOIUrl":"https://doi.org/10.4337/ROKE.2021.03.02","url":null,"abstract":"This paper incorporates human capital accumulation through provision of universal public education by a balanced-budget government to a demand-driven analytical framework of functional distribution and growth of income. Human capital accumulation positively impacts on workers’ productivity in production and their bargaining power in wage negotiations. In the long-run equilibrium, a rise in the tax rate (which also denotes the share of output spent in human capital formation) lowers the pre- and after-tax wage share and physical capital utilization, and thus raises (lowers) the output growth rate when the latter is profit-led (wage-led). The impact of a higher tax rate on the employment rate (which also measures human capital utilization) in the long-run equilibrium is negative (ambiguous) when output growth is wage-led (profit-led). In any case, the supply of higher-skilled workers does not automatically create its own demand.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"1 1","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41550238","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Almost 50 years ago, the Swedish econographer Axel Leijonhufvud (1973) wrote a seminal study on the Econ tribe titled ‘Life among the Econ.’ This study revisits the Econ and reports on their current state. Life has gotten more complicated since those bygone days. The cult of math modl-ing has spread far and wide, so that even lay Econs practice it. Fifty years ago the Econ used to say ‘Modl-ing is everything.’ Now they say ‘Modl-ing is the only thing.’ The math priesthood has been joined by a priesthood of economagicians. The fundamental social divide between Micro and Macro sub-tribes persists, but it has been diluted by a new doctrine of micro foundations. The Econ remain a fractious and argumentative tribe.
大约50年前，瑞典经济学家阿克塞尔·莱永胡弗德(Axel Leijonhufvud, 1973)写了一篇关于经济学部落的开创性研究，题为《经济学家的生活》(Life among the Econ)。这项研究重新审视了经济学，并报告了它们的现状。从那以后，生活变得更加复杂了。对数学建模的崇拜已经广泛传播，因此即使是非专业的经济学家也在实践它。50年前，经济学常说“建模就是一切”。’现在他们说‘当模特是唯一的出路。经济学家们加入了数学牧师的行列。微观和宏观亚部落之间的基本社会鸿沟仍然存在，但它已被一种新的微观基础学说所淡化。经济人仍然是一个脾气暴躁、好争论的部落。
{"title":"Life among the Econ: 50 years on","authors":"T. Palley","doi":"10.4337/ROKE.2021.03.07","DOIUrl":"https://doi.org/10.4337/ROKE.2021.03.07","url":null,"abstract":"Almost 50 years ago, the Swedish econographer Axel Leijonhufvud (1973) wrote a seminal study on the Econ tribe titled ‘Life among the Econ.’ This study revisits the Econ and reports on their current state. Life has gotten more complicated since those bygone days. The cult of math modl-ing has spread far and wide, so that even lay Econs practice it. Fifty years ago the Econ used to say ‘Modl-ing is everything.’ Now they say ‘Modl-ing is the only thing.’ The math priesthood has been joined by a priesthood of economagicians. The fundamental social divide between Micro and Macro sub-tribes persists, but it has been diluted by a new doctrine of micro foundations. The Econ remain a fractious and argumentative tribe.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46703668","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Book review: Adem Yavuz Elveren, The Economics of Military Spending: A Marxist Perspective (Routledge, London, UK and New York, NY, USA 2019) 224 pp.","authors":"David M. Fields","doi":"10.4337/ROKE.2021.02.07","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.07","url":null,"abstract":"","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"9 1","pages":"289-291"},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42182160","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study provides new evidence showing that the real exchange rate (RER) does not play an important role in the growth of Mexican GDP. Economic growth is not an automatically predetermined result of relative price correction, and it is important to consider distinctive aspects of national institutional arrangements (fiscal and monetary, for example) for understanding theoretical causality of demand. The empirical results show public expenditure is an overlooked variable in regressions where the exchange rate affects product growth. After incorporating public expenditure, the RER impact on growth becomes insignificant. For its part, public expenditure has a positive and significant effect on GDP in the long term. The RER does not lead to greater GDP since exports are not stimulated through price.
{"title":"Questioning the effect of the real exchange rate on growth: new evidence from Mexico","authors":"Florencia Medici, Augustín Mario, Alejandro Fiorito","doi":"10.4337/ROKE.2021.02.05","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.05","url":null,"abstract":"This study provides new evidence showing that the real exchange rate (RER) does not play an important role in the growth of Mexican GDP. Economic growth is not an automatically predetermined result of relative price correction, and it is important to consider distinctive aspects of national institutional arrangements (fiscal and monetary, for example) for understanding theoretical causality of demand. The empirical results show public expenditure is an overlooked variable in regressions where the exchange rate affects product growth. After incorporating public expenditure, the RER impact on growth becomes insignificant. For its part, public expenditure has a positive and significant effect on GDP in the long term. The RER does not lead to greater GDP since exports are not stimulated through price.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"9 1","pages":"253-269"},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43203023","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The new millennium has witnessed a rapid expansion of external balance sheets and significant changes in the capital, currency and sectoral compositions of foreign assets and liabilities of emerging economies. While foreign lending and investment in these economies have reached unprecedented levels, even deficit emerging economies have acquired sizeable amounts of foreign assets thanks to large inflows of capital. These changes in the size, composition and leverage of external balance sheets have created new channels of transmission of global financial shocks through their effects on international capital flows. They have also amplified the susceptibility of outstanding stocks of foreign assets and liabilities and net external positions of emerging economies to financial conditions in major reserve-currency countries, resulting in large capital gains and losses particularly at times of severe international financial instability. Since a very large proportion of external assets and liabilities of emerging economies are with advanced economies, such capital gains and losses entail transfers of wealth between these economies. Furthermore, emerging economies run deficits on net international investment income not only because their external liabilities exceed assets, but also because the return on their foreign assets is lower than the return on their liabilities. Even some emerging economies with positive net foreign assets positions such as China are in deficit in net international investment income. By contrast, the return differential is positive in all major advanced economies, including those with negative net foreign asset positions such as the US and the UK. This disparity between return differentials of foreign assets and liabilities of emerging and advanced economies, including capital gains and losses, results in a transfer of resources from the former to the latter, which reached 2.7 per cent of GDP of G20 emerging economies in 2016. To avoid such transfers, they need not only to improve their net financial asset positions but also change the nature and composition of their external assets and liabilities. Capital account policies can play an important role in these respects.
{"title":"External balance sheets of emerging economies: low-yielding assets, high-yielding liabilities","authors":"Y. Akyüz","doi":"10.4337/ROKE.2021.02.04","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.04","url":null,"abstract":"The new millennium has witnessed a rapid expansion of external balance sheets and significant changes in the capital, currency and sectoral compositions of foreign assets and liabilities of emerging economies. While foreign lending and investment in these economies have reached unprecedented levels, even deficit emerging economies have acquired sizeable amounts of foreign assets thanks to large inflows of capital. These changes in the size, composition and leverage of external balance sheets have created new channels of transmission of global financial shocks through their effects on international capital flows. They have also amplified the susceptibility of outstanding stocks of foreign assets and liabilities and net external positions of emerging economies to financial conditions in major reserve-currency countries, resulting in large capital gains and losses particularly at times of severe international financial instability. Since a very large proportion of external assets and liabilities of emerging economies are with advanced economies, such capital gains and losses entail transfers of wealth between these economies. Furthermore, emerging economies run deficits on net international investment income not only because their external liabilities exceed assets, but also because the return on their foreign assets is lower than the return on their liabilities. Even some emerging economies with positive net foreign assets positions such as China are in deficit in net international investment income. By contrast, the return differential is positive in all major advanced economies, including those with negative net foreign asset positions such as the US and the UK. This disparity between return differentials of foreign assets and liabilities of emerging and advanced economies, including capital gains and losses, results in a transfer of resources from the former to the latter, which reached 2.7 per cent of GDP of G20 emerging economies in 2016. To avoid such transfers, they need not only to improve their net financial asset positions but also change the nature and composition of their external assets and liabilities. Capital account policies can play an important role in these respects.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"9 1","pages":"232-252"},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48424216","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article examines the charge that Thirlwall's law is a theoretical tautology. It shows that a certain approach to empirical testing of that law can sometimes – under conditions analysed here – result in econometric estimates that reflect an approximate identity or ‘near-tautology’. Nevertheless, other methods of empirically testing the law are not subject to the near-tautology critique, and hence the theory itself is not a tautology. Econometric estimates for the US and Mexico reveal that the near-tautology critique applies to data for the former but not the latter; the difference in these results is explained by exactly the reasons discussed here. The article offers an alternative interpretation of Thirlwall's law as implying a benchmark for analysing whether national income, rather than relative prices, is the main adjusting factor in response to current-account imbalances in the long run.
{"title":"Thirlwall's law is not a tautology, but some empirical tests of it nearly are","authors":"Robert A. Blecker","doi":"10.4337/ROKE.2021.02.02","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.02","url":null,"abstract":"This article examines the charge that Thirlwall's law is a theoretical tautology. It shows that a certain approach to empirical testing of that law can sometimes – under conditions analysed here – result in econometric estimates that reflect an approximate identity or ‘near-tautology’. Nevertheless, other methods of empirically testing the law are not subject to the near-tautology critique, and hence the theory itself is not a tautology. Econometric estimates for the US and Mexico reveal that the near-tautology critique applies to data for the former but not the latter; the difference in these results is explained by exactly the reasons discussed here. The article offers an alternative interpretation of Thirlwall's law as implying a benchmark for analysing whether national income, rather than relative prices, is the main adjusting factor in response to current-account imbalances in the long run.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"9 1","pages":"175-203"},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48155844","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
For a developed market economy, the COVID-19 crisis is a new type of crisis, but such a crisis has parallels with economies at other times, and with crises in many places. We discuss some mechanisms from the traditional macro literature and from the literature on macroeconomics for developing countries. Phenomena such as bottlenecks, rationing, forced savings, production constrained by access to inputs, liquidity constraints, sector heterogeneity, and costs running despite production being shut down, are all permanent phenomena in developing countries. During the COVID-19 crisis, however, they have also emerged as key mechanisms in developed market economies. We discuss some of these well-developed but partially forgotten mechanisms by extending simple textbook descriptions, and we provide some examples of how the effects of policy are changed in a time of crisis.
{"title":"The macroeconomics of COVID-19: a two-sector interpretation","authors":"Halvor Mehlum, Ragnar Torvik","doi":"10.4337/ROKE.2021.02.01","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.01","url":null,"abstract":"For a developed market economy, the COVID-19 crisis is a new type of crisis, but such a crisis has parallels with economies at other times, and with crises in many places. We discuss some mechanisms from the traditional macro literature and from the literature on macroeconomics for developing countries. Phenomena such as bottlenecks, rationing, forced savings, production constrained by access to inputs, liquidity constraints, sector heterogeneity, and costs running despite production being shut down, are all permanent phenomena in developing countries. During the COVID-19 crisis, however, they have also emerged as key mechanisms in developed market economies. We discuss some of these well-developed but partially forgotten mechanisms by extending simple textbook descriptions, and we provide some examples of how the effects of policy are changed in a time of crisis.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":" ","pages":""},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43373124","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Book review: Naomi Lamoreaux and Ian Shapiro (eds), The Bretton Woods Agreements: Together with Scholarly Commentaries and Essential Historical Documents (Yale University Press, New Haven, CT, USA 2019) 504 pp.","authors":"A. Faudot","doi":"10.4337/ROKE.2021.02.08","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.08","url":null,"abstract":"","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"9 1","pages":"292-295"},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48325354","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the statistical relationship between the future expectations of the exchange rate and GDP growth and the current nominal exchange rate in Brazil during the period 2002–2017. The theoretical framework on which the paper is based is a decision-making model grounded in Keynes (1921; 1936) and Harvey (2006; 2009a), from which the paper's empirical model emerges. This model is tested empirically with autoregressive distributed lag models to identify short- and long-term statistical relationships in time series. The empirical estimations suggest that expectations of future changes in both the exchange rate and GDP growth have a statistically significant relationship with the current nominal exchange rate in Brazil, just as the Keynes–Harvey model predicts.
{"title":"Expectations and exchange rates in a Keynes–Harvey model: an analysis of the Brazilian case from 2002 to 2017","authors":"Leandro Vieira Araújo Lima, F. Terra","doi":"10.4337/ROKE.2021.02.06","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.06","url":null,"abstract":"This paper investigates the statistical relationship between the future expectations of the exchange rate and GDP growth and the current nominal exchange rate in Brazil during the period 2002–2017. The theoretical framework on which the paper is based is a decision-making model grounded in Keynes (1921; 1936) and Harvey (2006; 2009a), from which the paper's empirical model emerges. This model is tested empirically with autoregressive distributed lag models to identify short- and long-term statistical relationships in time series. The empirical estimations suggest that expectations of future changes in both the exchange rate and GDP growth have a statistically significant relationship with the current nominal exchange rate in Brazil, just as the Keynes–Harvey model predicts.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"9 1","pages":"270-288"},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42794770","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper surveys integrated assessment models applied to Brazil. We show that these models belong to the environmental economics literature that fails to consider some of the most important aspects of the modern macroeconomic dynamics in Brazil. These features include monetary and financial balances, income distribution, and physical limits to growth. We argue that the most suitable framework for modeling a low-carbon Brazilian economy would incorporate both Post-Keynesian and ecological economics principles. This new modeling method would strengthen our understanding of environmental mitigation action consequences and would allow us to explore new climate-policy packages.
{"title":"A macroeconomic critique of integrated assessment environmental models: the case of Brazil","authors":"Rafael Cattan, Florent McIsaac","doi":"10.4337/ROKE.2021.02.03","DOIUrl":"https://doi.org/10.4337/ROKE.2021.02.03","url":null,"abstract":"This paper surveys integrated assessment models applied to Brazil. We show that these models belong to the environmental economics literature that fails to consider some of the most important aspects of the modern macroeconomic dynamics in Brazil. These features include monetary and financial balances, income distribution, and physical limits to growth. We argue that the most suitable framework for modeling a low-carbon Brazilian economy would incorporate both Post-Keynesian and ecological economics principles. This new modeling method would strengthen our understanding of environmental mitigation action consequences and would allow us to explore new climate-policy packages.","PeriodicalId":45671,"journal":{"name":"Review of Keynesian Economics","volume":"9 1","pages":"204-231"},"PeriodicalIF":1.6,"publicationDate":"2021-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49115653","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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