Analytical Political Economy E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Surveys of Recent Research in Economics
• Sprache: Englisch

Seitenzahl: 1039

Veröffentlichungsjahr: 2018

Beschreibung

Offering a unique picture of recent developments in a range of non-conventional theoretical approaches in economics, this book introduces readers to the study of Analytical Political Economy and the changes within the subject. * Includes a wide range of topics and theoretical approaches that are critically and thoroughly reviewed * Contributions within the book are written according to the highest standards of rigor and clarity that characterize academic work * Provides comprehensive and well-organized surveys of cutting-edge empirical and theoretical work covering an exceptionally wide range of areas and fields * Topics include macroeconomic theories of growth and distribution; agent-based and stock-flow consistent models; financialization and Marxian price and value theory * Investigates exploitation theory; trade theory; the role of expectations and 'animal spirits' on macroeconomic performance as well as empirical research in Marxian economics

Leseprobe

Analytical Political Economy

Edited by Roberto Veneziani and Luca Zamparelli

This edition first published 2018Chapters © 2018 The AuthorsBook compilation © 2018 John Wiley & Sons LtdOriginally published as a special issue of the Journal of Economic Surveys (Volume 31, Issue 5)

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Library of Congress Cataloging-in-Publication Data

Names: Veneziani, Roberto, 1972– editor. | Zamparelli, Luca, editor.Title: Analytical political economy / edited by Roberto Veneziani, Luca Zamparelli.Description: Hoboken : Wiley-Blackwell, 2018. | Series: Surveys of recent research in economics | Includes index. |Identifiers: LCCN 2018006239 (print) | LCCN 2018010004 (ebook) | ISBN 9781119483335 (pdf) | ISBN 9781119483311 (epub) | ISBN 9781119483366 (paperback)Subjects: LCSH: Economics. | Economic policy. | Macroeconomics. | BISAC: BUSINESS & ECONOMICS / Economics / Macroeconomics.Classification: LCC HB171.5 (ebook) | LCC HB171.5 .A483 2018 (print) | DDC 330—dc23LC record available at https://lccn.loc.gov/2018006239

Cover Design: WileyCover Image: © Evgenii_Bobrov/Gettyimages

For Vanda and Bruno. They know exactly why.R.V.

To my mother, who made it possible.L.Z.

Contents

Cover

Titlepage

1 ANALYTICAL POLITICAL ECONOMY

References

2 TAKING STOCK: A RIGOROUS MODELLING OF ANIMAL SPIRITS IN MACROECONOMICS

1. Introduction

2. The General Framework

3. Heterogeneity and Animal Spirits in the New-Keynesian Framework

4. Herding and Objective Determinants of Investment

5. Empirical Validation

6. Conclusion

Acknowledgement

Notes

References

3 THE AGENT-BASED APPROACH TO POST KEYNESIAN MACRO-MODELING

1. Introduction

2. Background

3. The Financial Instability Hypothesis in AB Models

4. AB Model Applications in Structuralist-Neo-Kaleckian and Evolutionary Models

5. SFC-AB Models: Toward a New Benchmark?

6. Concluding Remarks

Ackowledgments

Notes

References

4 STOCK-FLOW CONSISTENT MACROECONOMIC MODELS: A SURVEY

1. Introduction

2. Basic Principles

3. Extensions: Finance, the Monetary Circuit and Income Distribution

4. Modelling the Open Economy

5. Empirical Models for Whole Countries

6. SFC and Agent-Based Modelling

7. SFC Ecological Models

8. Instead of Conclusion: Onomastics

Acknowledgements

Notes

References

5 HETERODOX THEORIES OF ECONOMIC GROWTH AND INCOME DISTRIBUTION: A PARTIAL SURVEY

1. Introduction

2. A General Framework and Alternative Models

3. Dynamics

4. Modifying the General Framework

5. Conclusion

Acknowledgment

Notes

References

6 ENDOGENOUS TECHNICAL CHANGE IN ALTERNATIVE THEORIES OF GROWTH AND DISTRIBUTION

1. Introduction

2. Neoclassical Growth Theory

3. Alternative Theories of Growth and Distribution

4. Classical Closures

5. Post-Keynesian Closures

6. Costly Innovation

7. Conclusion

Acknowledgments

Notes

References

7 MINSKY MODELS: A STRUCTURED SURVEY

1. Introduction

2. Overview and Structure of Minsky Models

3. Debt or Interest Dynamics

4 Asset Price Dynamics

5. Mainstream Minsky Models

6. Conclusion

Acknowledgements

Notes

References

8 FINANCIALIZATION AND INVESTMENT: A SURVEY OF THE EMPIRICAL LITERATURE

1. Introduction

2. Defining Financialization

3. Firm Financial Behaviour and Investment

4. Shareholder Value Orientation

5. Conclusions

Notes

References

9 QUANTITATIVE EMPIRICAL RESEARCH IN MARXIST POLITICAL ECONOMY: A SELECTIVE REVIEW

1. Introduction

2. The Value Controversy

3. Marxian National Accounts

4. Classical Theory of Relative Prices

5. Probabilistic Political Economy

6. Profitability Analysis

7. Classical-Marxian Theories of Growth, Distribution and Technical Change

8. Conclusion

Acknowledgements

Notes

References

10 VALUE, PRICE, AND EXPLOITATION: THE LOGIC OF THE TRANSFORMATION PROBLEM

1. Introduction

2. What Is Value Theory For?

3. The Basic Marxian Framework

4. Classical Long-Period Equilibrium

5. The Transformation Problem as an Impossibility Result: The Dualist Approach

6. The New Interpretation

7. An Althusserian Approach

8. A Macromonetary Approach

9. The Temporal Single-System Interpretation

10. Stochastic Approaches

11. Conclusions

Notes

References

11 A PROGRESS REPORT ON MARXIAN ECONOMIC THEORY: ON THE CONTROVERSIES IN EXPLOITATION THEORY SINCE OKISHIO (1963)

1. Introduction

2. The Main Developments in Mathematical Marxian Economics from the 1970s until the 1990s

3. The PR Exploitation by Roemer (1982)

4. Recent Trends of Exploitation Theory in Political Philosophy and Sociology

5. Recent Developments of Exploitation Theory in Economics: An Axiomatic Approach

6. Concluding Remarks

Acknowledgments

Notes

References

12 SOUTH–SOUTH AND NORTH–SOUTH ECONOMIC EXCHANGES: DOES IT MATTER WHO IS EXCHANGING WHAT AND WITH WHOM?

1. Introduction

2. Economic Development and Global Integration within the Global South

3. Evolving Nature of South–South and North–South Exchanges

4. Theory and Empirics of South–South Trade and Finance

5. China and the Emerging South in Africa

6. Is South–South Still a Meaningful Category?

7. Conclusion

Acknowledgments

Notes

References

Appendix

Index

List of Tables

Table 1.

Table 1

Table 2

Table 3

Table 4

Table 1

Table 1

Table 1.

Table 2.

Table 3.

Table 4.

Table 5.

Table 6.

Table 7.

List of Illustrations

Figure 1.

Phase Diagrams of (8) for Four Different Regimes.

Figure 2.

A Representative Simulation Run of Model (9)–(14).

Figure 3.

Auto- and Cross-Covariance Profiles of the Estimated ‘Old-Keynesian’ Model in Franke (2012b).

Figure 1.

The Classical-Marxian Model.

Figure 2.

The New-Keynesian Model.

Figure 3.

The Kalecki–Steindl Model.

Figure 1.

The Induced Innovation Hypothesis.

Figure 2.

Marx-Biased Technical Change for Selected Countries. Source: Penn World Tables 9.0 (Feenstra

et al.

, 2015).

Figure 1.

Families of Minsky Models.

Figure 1.

Fixed Capital and Financial Assets Relative to Sales (Yearly Median Across Nonfinancial Corporations).

Figure 2.

Gross Debt as a Percentage of Fixed Capital (The Across-Firm Yearly Mean of Nonfinancial Corporations).

Figure 3.

Stock Market Turnover, USA Stock Market (1980–2014).

Figure 4.

Gross Stock Repurchases Relative to Total Outstanding Equity (The Across-Firm Yearly Mean of Nonfinancial Corporations).

Figure 5.

The Investment Decision in Stockhammer (2004).

Figure 1.

Alternative Classifications of the Four Basic Activities of Social Reproduction in the Neoclassical/Keynesian and Classical-Marxian traditions.

Figure 2.

Marx-Biased Technical Change and the Choice of Technique.

Figure 1.

The Share of South and North in World Merchandise Goods Trade, 1948–2013.

Figure 2.

Share of Emerging South within South–South and South–North Merchandise Exports, 1948–2013.

Figure 3.

Share of South, Emerging South, and North in World Manufactures Exports, 1962–2012.

Figure 4.

Share of South and North in World High-Skill Manufactures Exports, 1962–2012.

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Guide

Cover

Table of Contents

1ANALYTICAL POLITICAL ECONOMY

Roberto Veneziani

School of Economics and FinanceQueen Mary University of London

Luca Zamparelli

Department of Social and Economic SciencesSapienza University of Rome

This special issue collects 11 surveys on recent developments in Analytical Political Economy. Originally a branch of moral philosophy, political economy emerged as an autonomous discipline during the early stages of the industrial revolution, thanks to the analyses of French physiocrats and British classical political economists. It can be loosely defined as the social science that studies the production and distribution of wealth in a capitalist market economy. Abandoned in favour of the more neutral ‘Economics’, nowadays the term is still used to indicate approaches to economic analysis that lie beyond the boundaries of mainstream, neoclassical analysis rooted in the Walrasian general equilibrium tradition.

Contributions gathered in this volume survey a wide variety of topics and belong to different schools of thought. They are grouped together as they all review recent formal, rigorous economic research – both theoretical and empirical – that rejects at least some of the defining features of neoclassical economics; hence the name Analytical Political Economy.

Despite the heterogeneity, we can use some broad categories to describe the surveys comprised in this special issue. Papers by Reiner Franke and Frank Westerhoff, Corrado Di Guilmi, and Michalis Nikiforos and Gennaro Zezza deal with topics belonging to Keynesian macroeconomics. One of the fundamental claims of Keynes's analysis is that in a monetary economy there may be no tendency to full employment as investment and saving decisions are taken by different economic actors. In fact, the role of investors’ beliefs, expectations and confidence about the future state of the economy is crucial in determining the equilibrium level of employment and economic activity (Keynes, 1936). Franke and Westerhoff review recent approaches to formalize and model ‘animal spirits’ in macrodynamic models that explicitly reject the rational expectation hypothesis. They do so by developing a canonical framework that is flexible enough to encompass two ways to model attitudes toward optimism andpessimism: the discrete choice and the transition probability approach, where individual agents face a binary decision and choose one of them with a certain probability. These assessments are adjusted – either upward or downward – in response to what agents observe, which leads to changes in aggregate sentiment and therefore in the relevant macroeconomic variables.

Di Guilmi surveys the growing literature sparked by the recent cross-fertilization of agent-based modelling and Post-Keynesian macroeconomics. He argues that agent-based modelling is fully consistent with the Post-Keynesian approach and that both areas of research can benefit from mutual engagement. The survey discusses how various models have solved the issues raised by the adoption of the bottom-up approach typical of agent-based models in a traditionally aggregative structure and highlights the novel insights derived from this modelling strategy. The papers reviewed are grouped into four different categories: agent-based models that formalize Hyman Minsky's ‘Financial Instability Hypothesis’; evolutionary models with Post-Keynesian features; neo-Kaleckian models with agent-based features; and Stock-Flow-Consistent agent-based models.

Stock-Flow-Consistent models are the focus of the analysis developed by Nikiforos and Zezza. They first illustrate the general features of the Stock-Flow-Consistent approach, forcefully showing that it is a framework capable of accounting for the real and the financial sides of the economy in an integrated way. They then discuss how the core Stock-Flow-Consistent model has been recently extended to address issues such as financialization and income distribution, open economies and ecological macroeconomics.

The two papers by Amitava Dutt, and Daniele Tavani and Luca Zamparelli review the latest developments in models of growth and income distribution. The relation between growth and distribution has been central in political economy since the classical economists – Smith and Ricardo in particular – argued that the accumulation of capital must be financed by saving out of profits. The direction of causality has been later inverted by Post-Keynesian economists, who considered distribution as the adjusting variable, given the Keynesian assumption on the exogenous nature of investment (see Kurz and Salvadori, 1995 for an introduction to the discussion). Both papers develop unified frameworks, which, once coupled with different closures, can describe Classical-Marxian, Kaleckian, and Post-Keynesian heterodox growth models. Dutt extends the general framework to show how recent contributions have enriched the original theories with new topics such as money and inflation, finance and debt, multisector issues, open economy and environmental questions. Tavani and Zamparelli, instead, focus on endogenous technical change and use the unified structure to compare heterodox and neoclassical models of exogenous, semi-endogenous and endogenous growth.

The papers by Maria Nikolaidi and Engelbert Stockhammer, and Leila Davis focus on finance and the financial sector. Minsky's ‘Financial Instability Hypothesis’ (Minsky, 1986) is arguably the most influential theory of financial markets in non-mainstream economics. It is a theory of endogenous cycles based on debt accumulation by the private sector. Times of economic stability and prosperity make borrowers and lenders progressively underestimate risk. Their optimism engenders an excessive expansion of credit, which, eventually, creates financial bubbles and busts. Minsky's analysis was mostly qualitative but in the latest decades a number of scholars have formalized his intuitions in macroeconomic theoretical models.

Nikolaidi and Stockhammer review these efforts by distinguishing between models that focus on the dynamics of debt or interest, and models in which asset prices play a key role in the evolution of the economy. Within the first category of models they classify: Kalecki–Minsky models; Kaldor–Minsky models; Goodwin–Minsky models; credit-rationing Minsky models; endogenous target debt ratio Minsky models and Minsky–Veblen models. Within the second category of models, they distinguish between the equity price Minsky models and the real estate price Minsky models.

The work of Minsky is also central in the literature discussed by Davis. She surveys the empirical literature that has studied the effects of the post-1980 expansion of finance in advanced economies, or ‘financialization’, on capital accumulation. After introducing a range of empirical indicators to define what is indeed meant by ‘financialization’, she proposes to use three approaches to categorize the literature on financialization and investment. The first two approaches emphasize rising income flows between nonfinancial corporations and finance: first, growth in nonfinancial corporations’ financial incomes and, second, growth in the payments of nonfinancial corporations to creditors and shareholders. The third approach emphasizes the most developed behavioural explanation linking financialization to reduced investment: shareholder value orientation.

The papers by Deepankar Basu, Simon Mohun and Roberto Veneziani, and Naoki Yoshihara survey a rather different strand of Analytical Political Economy, as they focus on recent advances in Marxian economics. Basu reviews empirical research in Marxist political economy, focusing in particular on: Marxist national accounts, probabilistic political economy, profitability analysis, and Classical-Marxian theories of growth and technical change. He also considers recent empirical studies focusing on the Classical-Marxian theory of relative prices and values, which is at the heart of the other two surveys. The labour theory of value states that the economic value of a commodity is determined by the amount of labour socially necessary to produce it (Marx, 1867). It lies traditionally at the core of Marxian economic analysis; and it is at the centre of innumerable disputes around the so-called “transformation problem,” investigating the relationship between labour values and prices, and exploitation theory. Mohun and Veneziani adopt an axiomatic approach to interpret the ‘transformation problem’ as an impossibility result for a specific interpretation of value theory based on specific assumptions and definitions. They provide a comprehensive review of recent theoretical literature and show that, contrary to the received wisdom, there are various theoretically sound, empirically relevant and logically consistent alternative interpretations of the labour theory of value based on different assumptions and definitions. Yoshihara thoroughly analyses the development of exploitation theory in mathematical Marxian economics from the 1970s till today, with a special focus on the controversies surrounding the relation between profits and exploitation in capitalist economies, and its relevance for the definition of the concept of exploitation.

Finally, the paper by Omar Dahi and Firat Demir focuses on international trade and development economics, and in particular it analyses the cost-benefit literature on South–South versus South–North economic exchanges. After providing a discussion on the definition of the notions of ‘North’ and ‘South’ and offering a statistical overview of South–South economic relations, the paper provides a framework for situating the literature by reviewing the traditional targets of development as well as the benefits and drawbacks of integration into the global economy in both South–South and North–South directions.

References

Marx, K. (1867 [1977]) Capital. A Critique of Political Economy, Vol. I. London: Penguin.

Minsky, H.P. (1986) Stabilizing an Unstable Economy. New Haven: Yale University Press.

Keynes, J.M. (1936) The General Theory of Employment, Interest, and Money. London: Macmillan.

Kurz, H. and Salvadori, N. (1995) Theory of Production: A Long-Period Analysis. Cambridge: Cambridge University Press.