List of Issues

2021 15(1)

The Euler Equation Approach: Critical Implications of Recent Developments in the Theory of Intertemporal Choice


Daria Pignalosa


The paper deals with the development of the mainstream theory of intertemporal choice based on the idea that individuals choose consumption and saving in order to maximize lifetime expected utility subject to an intertemporal budget constraint. This analytical framework rests on the theories developed in the 1950s by Modigliani and Friedman and revisited in the 1970s with the introduction of the rational expectations assumption. Starting with Hall (1978), the literature focused on testing the model relying on the first-order conditions of the optimization problem faced by the consumer — the Euler equation — and a number of empirical puzzles arose. Therefore, the subsequent decades were dedicated to progressively modifying the original model so as to render it able to explain the data. The paper argues that the introduction of highly specific assumptions, needed to reconcile theory and empirical evidence, has affected the generality of the implications that can be drawn from the model. Furthermore, the ever more substantial departure from the original formulation seems to have resulted in a gradual abandonment of the very premises on which the neoclassical approach to consumption analysis was built.

Volume :- No.15 (2021)

Issue No :- 1 (2021)

Pages :- 1-43

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Revisiting the role and consequences of Econophysics from a Marxian perspective


Nikolaos Th. Chatzarakis


The idea that economic phenomena are governed by stochasticity and uncertainty led to the extensive use of concepts and methods from the physical sciences that deal with non-deterministic patterns, giving rise to the multidisciplinary field of Econophysics. The last decade, several voices rose against it arguing that no new knowledge has been obtained and that the Econophysicists have merely ‘discovered’ what was already known in Economics. There also have been economists arguing that the mixture of physical models and economic ideas can still blossom and provide new insights into the study of Economics. In this paper, we attempt to reveal a different aspect of Econophysics, one that builds on its corroborative character and its role in criticizing neoclassical approach. In our view Econophysics can be used as a new enlarged version of Econometrics, as a set of methodologies to subject the economic models to logical and empirical tests. But, to do so, we argue, it is also necessary to ‘release’ this strict methodological research from any theoretical or ideological doctrine, including those neoclassical axioms so well incorporated in Economics. In view of this, we show that econophysical models by and large give further insights to discard the Marginalist paradigm point towards a different perception, closer to the old Classical and Marxian theories of political economy.

Volume :- No.15 (2021)

Issue No :- 1 (2021)

Pages :- 45-68

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Investigating the Greek Unemployment from a Classical Perspective


Alex Gymnopoulos, Thanos Poulakis, Haris Poulakis and Nikolaos Chatzarakis


This paper addresses the issue of unemployment in Greek economy from a Marxist perspective. Specifically, we focus on analysing the structure of the Greek labour market with respect to the results of the memoranda and their relation to the current phase of capital accumulation. Rejecting the orthodox approaches to measuring and analysing unemployment, we first turn our focus to three indicators that are proposed by the BLS, calculating them in the case of the Greek labour market. Then, the three categories of stagnant, conjectural and latent reserve army are presented and respective unemployment rates are calculated for the Greek economy. Our conclusion is that the Marxian categories, not only capture the real dimension and size of the labour market, but they also contain information about changes in the labour force, that are not easily considered through the official indices.

Volume :- No.15 (2021)

Issue No :- 1 (2021)

Pages :- 69-91

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Credit, money and economic growth: two volumes in honour of Lavoie and Seccareccia


Enrico Sergio Levrero


This review article provides a brief outline of the content of two recent volumes edited by Rochon and Bougrine in honour of Lavoie and Seccareccia. Observations are then advanced on two points raised in the two volumes, namely the effect of the monetary policies on income distribution and the implications of the zero lower bound on the monetary policy. Finally, some contributions focusing on secular stagnation are commented on.

Volume :- No.15 (2021)

Issue No :- 1 (2021)

Pages :- 93-108

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Books review

On Early Monetary Thought, Edward W. Fuller

Santiago J. Gahn

Volume :- No.15 (2021)

Issue No :- 1 (2021)

Pages :- 109-113

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2020 14(2)

Monetary Policy and Structural Change: an Introduction


Louis-Philippe Rochon and Guillaume Vallet

Volume :- No.14 (2020)

Issue No :- 2 (2020)

Pages :- 149-152

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The Influence of the Interest Rate in Capitalist Competition: Capital Differentiation and Structural Change


Nicolás Águila and Juan M. Graña


We contribute to the Marxist discussion on the role of the interest rate in the investment and financing decisions of firms, a crucial dimension that has not received sufficient attention in the literature. The market rate of interest acts as a benchmark for the profit rate of each capital, allowing firms to decide how to allocate their funds between industrial accumulation and financial valorization. Once they resolve to invest, the interest rate also influences their choice on how to finance the investment between their own and borrowed capital. Considering capitalist competition as a process resulting in the differentiation between ‘normal’ capitals - that appropriate the general rate of profit - and ‘small’ capitals - that appropriate a lower-than-general rate of profit -, we show that changes in the interest rate have different consequences for these two types of capitals. ‘Normal’ capitals invest if the general rate of profit is higher than the interest rate and borrow capital to finance their investment, thereby appropriating a higher rate of profit of enterprise. Meanwhile, ‘small’ capitals are regulated by the interest rate. If the rate of interest increases, even if it remains below the general rate of profit, it could push them into bankruptcy and turn them into interest-bearing capital. Moreover, they face restrictions to access credit, further widening the gap between their rate of profit of enterprise and that of normal capitals. Finally, the paper presents some ideas to build a framework to analyze the consequences of different interest rate regimes for structural change in the context of capital differentiation, and argues for state direction of credit.

Volume :- No.14 (2020)

Issue No :- 2 (2020)

Pages :- 153-177

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The Changing Growth Pattern in the Spanish Economy Driven by the Eurosystem: from Poor Supervision to Conditionality on the Provision of Central Bank Reserves


Eladio Febrero


The Spanish economy has experienced a deep change in its growth pattern over the last 20 years, shifting from a debt-led model driven by the real estate sector, from the introduction of the euro to 2007, to a “seemingly” export-led model, from 2014 to 2019. Although this shift was partly due to the unsustainability of the former growth pattern in the long run, it was strongly affected firstly by the poor supervision of banks by the Banco de España, allowing for a huge private indebtedness and real estate bubble, and later by the conditionality imposed by the ECB on governments in troubled economies in exchange for granting access to reserves to banks in their respective jurisdictions. This paper contains three conclusions. Firstly, the Banco de España should explain the degree of complacence with which it viewed the situation until the real estate bubble burst. Secondly, the ECB went beyond its mandate with its conditionality. And thirdly, despite its strong pressure for the adoption of fiscal consolidation and wage devaluation, Spain has not become a true export-led economy.

Volume :- No.14 (2020)

Issue No :- 2 (2020)

Pages :- 179-201

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Central Banks’ Contribution to Financial Instability


Sergio Rossi


Financial stability has been a largely-debated issue since the bursting of the global financial crisis in 2008. Central banks seem to have discovered that price stability on the market for produced goods and services is not enough to avoid financial instability through monetary policy interventions. This paper explains that, in fact, both pre- and postcrisis interventions by monetary authorities have been contributing to inflate asset prices, thereby increasing in various ways the level of financial instability and fragility of the economy as a whole. This paper puts forward a monetary–structural reform to eradicate this problem definitively.

Volume :- No.14 (2020)

Issue No :- 2 (2020)

Pages :- 203-217

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Rate of Interest and Public Debt in a Sraffian-Keynesian Model


Giuseppe Vitaletti


There is a nexus between the actual economic crisis, which started in 2008, and economic theory. Economic theory not only failed to predict the crisis, but seems to be a long way from discussing it in plain terms. There are two main impediments to this. One is increasing returns, whereas economic discussion is centred on decreasing returns. The other impediment is the removal of Keynesian subjects, or, at least, the specific removal of any discussion on the rate of interest being zero in the long run, that Keynes formulated, although he did not explicitly theorize on it. This paper starts from basic Sraffian economic theory to reconstruct the essence of Keynesianism, after a passage through a pre-Keynesian model. The role of the interest rate is particularly focussed on. When this is positive, especially if very much so, no problem arises. When this is small or nil, due to low levels of Investment and high levels of Savings, an economic crisis develops. The same crisis may be reinforced by increasing returns and their effects on Savings. This is unless public debt grows through the increase of public deficits. There is the balance of payments surplus which absorbs Savings, but this is helpless in solving the crisis at a global level, since it corresponds unavoidably to balance of payments deficits. That is why it is folly for the EU to put a halt to public deficits. On the contrary allowing deficits to grow becomes vital, after sterilizing through fiscal means their effects on the interest rate, including the private. Excess profits must also be hit at international level.

Volume :- No.14 (2020)

Issue No :- 2 (2020)

Pages :- 219-231

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Book Review

Crisis in the European Monetary System. A Core-Periphery Perspective, London: Routledge 2019. By Giuseppe Celi, Andrea Ginzburg, Dario Guarascio, Annamaria Simonazzi


Enrico Sergio Levrero

Volume :- No.14 (2020)

Issue No :- 2 (2020)

Pages :- 233-237

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List of Referees (2019-2020)

Volume :- No.14 (2020)

Issue No :- 2 (2020)

Pages :- 239

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2020 14(1)


Sergio Cesaratto & Stefano Di Bucchianico


The paper is a contribution to a monetary theory of demandled growth with elements from Sraffian supermultiplier analysis, monetary circuit theory, Modern Monetary Theory and endogenous money theory. The Sraffian supermultiplier is indicated as the most promising heterodox approach to growth and instability in capitalism. This approach allows consideration of such non-capacity-creating autonomous components of aggregate demand as autonomous consumption, public spending and exports, as the ultimate sources of growth and instability in modern capitalism. Following Steindl, capital gains are included among these components. Autonomous demand and investment are typically fed by endogenous money creation. The paper articulates the relation between autonomous demand and investment on one hand, and endogenous finance on the other, in the light of Keynes’s distinction between initial and final finance.

Volume :- No.14 (2020)

Issue No :- 1 (2020)

Pages :- 1-38

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Interest, profit and saving in Arrow-Debreu equilibrium models


Saverio M. Fratini


The paper aims to point out that the concepts of interest, profit and saving that we come across in the Arrow-Debreu equilibrium models are significantly different from what is usually indicated by these same terms in economic analysis. In fact, in the Arrow-Debreu models, they are not related to the investment of capital. As we shall try to show, the difficulties that the Arrow-Debreu theory encounters with reference to capital and related concepts derive from the hypothesis of markets open in a single moment that characterizes these models.

Volume :- No.14 (2020)

Issue No :- 1 (2020)

Pages :- 39-53

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Secular Stagnation Revisited


Davide Gualerzi


The paper focuses on the resurfacing of the question of stagnation in the debate on the crisis. It examines the rejuvenation of the “secular stagnation” hypothesis that had fallen largely out of sight. Its history helps to frame the question of stagnation tendencies today. The paper argues that we need to look at the peculiar pattern of transformation dictated by the ongoing development of ICTs within the larger question of the reasons underpinning the structural lack of aggregate demand. The Internet has “developed” the market of higher order needs such as access and interactivity in a unique way. But ICTs have become the enabling tool for a restructuring of many of the industries serving these needs. Precisely this pervasive transformation is an important factor in the possible renewal of stagnation tendencies. Higher order needs are no longer developed into large markets in the way needs were “industrialized” in the “golden age” of advanced industrial economies. If one considers social distancing and smart work, it appears that the role ICTs is likely to be pushed forward by the Covid-19 pandemics.

Volume :- No.14 (2020)

Issue No :- 1 (2020)

Pages :- 55-79

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Two routes back to the old Phillips curve: the amended mainstream model and the conflict augmented alternative


Ricardo Summa & Julia Braga


Blanchard recently stated that the old Phillips curve is alive and well. In this paper we argue that there are two routes to this old Phillips curve. The mainstream route assumes demand-pull inflation and full incorporation of inflation expectations into money wages, and amendments to avoid its accelerationist behavior. The alternative nonneoclassical conflict-augmented Phillips curve assumes no labour scarcity, cost-push inflation and that expectations are not always fully passed on to nominal wages. Additionally, this alternative is also more general than the Heterodox-NAIRU models, as it is compatible both with stable and accelerating inflation, depending on the strength of the workers’ bargaining power.

Volume :- No.14 (2020)

Issue No :- 1 (2020)

Pages :- 81-115

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Financial Instability and Effects of Monetary Policy


Toshio Watanabe


Keynes and Minsky emphasize the effects of instability in the financial markets. We represent bank behavior and household portfolio preferences explicitly and investigate monetary policy effects on economic stabilization. Our model comprises dynamic equations for both the debtcapital ratio and the interest rate monetary policy. We show that the economy becomes unstable when the equity demand from households is sensitive to the debt-capital ratio. Further, we indicate that it is hard to change an unstable state into a stable state by changing monetary policy alone. We point out the need for financial regulations to make central bank policy effective.

Volume :- No.14 (2020)

Issue No :- 1 (2020)

Pages :- 117-145

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2019 13(2)

Monetary policy and income distribution: an introduction


Enrico Sergio Levrero

Volume :- No.13 (2019)

Issue No :- 2 (2019)

Pages :- 107-115

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On Pasinetti’s ‘natural’ rate of interest


Enrico Bellino


This paper provides a concise exposition of the notion of ‘natural rate of interest’ introduced by Luigi Pasinetti in his structural change analysis. Its normative nature is suitably stressed: it is that rate of interest that prevents that debt and credit relations among individuals alter a distribution of national income based on the ‘labour principle’, that is, a situation where each individual perceives income in proportion to the quantity of labour provided.

Volume :- No.13 (2019)

Issue No :- 2 (2019)

Pages :- 117-137

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Macroeconomics and natural rates: some reflections on Pasinetti’s fair rate of interest


Marc Lavoie & Mario Seccareccia


Monetary policy based on the Wicksellian natural rate of interest is progressively losing its hold on macroeconomic theory and policy. We advocate a ‘park it’ approach to monetary policy, where the interest rate is not set as a counter-cyclical tool based on this natural rate. The paper presents what has been called the Pasinetti rule, based on his concept of the fair or just rate of interest – a distribution-neutral rate. Central banks should insure that the nominal rate of interest – the long-term government bond rate – is equal to the growth rate of labour compensation.

Volume :- No.13 (2019)

Issue No :- 2 (2019)

Pages :- 139-165

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On Interest as a Monetary Phenomenon and the ‘Best’ Interest-rate Policy


Massimo Pivetti


The article discusses the real effects of interest-rate policy, as well as its impact on inflation, once the traditional concept of a ‘natural’ real rate of interest is discarded and interest is viewed as a monetary phenomenon, a true policy variable subject to a wide range of policy objectives and constraints, which contributes to determine normal production costs. Attention is then focused on the merits of cheap money, whilst it is maintained, by contrast, that a persistent zero real interest-rate policy would ultimately be incompatible with capitalist production. The article concludes by pointing out the implications of the main arguments put forward here for the status of the central bank and the question of capital control.

Volume :- No.13 (2019)

Issue No :- 2 (2019)

Pages :- 167-187

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Remarks on Monetary Policy and Fiscal Policy in an Era of Financialisation


Jalal Qanas & Malcolm Sawyer


The paper considers some of the issues for the conduct of monetary and fiscal policy which arise in the era of financialisation. It opens with a critical assessment of the dominant approach to monetary policy, namely inflation targeting underpinned by the ‘new consensus in macroeconomics’. Within that analytical framework the role of the ‘natural rate of interest’ is critically examined. It is argued that that ‘natural rate of interest’ is a construct of a specific analytical framework and as such it lacks validity in reality in so far as that analytical framework does not provide a good approximation to that reality. This is followed by consideration of some of the issues of coordination between fiscal and monetary policies. It is argued that fiscal and monetary policies can not be separated (as is the case with the new consensus). The nature of a post-Keynesian monetary policy in the present era of financialisation, and particularly the developments of securitisation, is discussed.

Volume :- No.13 (2019)

Issue No :- 2 (2019)

Pages :- 189-208

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2019 13(1)

Kaldor after Sraffa


Óscar Dejuán


Kaldor led the postKeynesian school in an attempt to project Keynes’ principle of effective demand into the long run, the realm of growth theories. This paper examines Kaldor’s major contributions to growth, technical change, distribution and money, in order to integrate them into the surplus approach. An approach that combines the classicalSraffian theory of value and distribution with the KeynesianpostKeynesian theory of output and money. An approach that considers capitalism as a demand- constrained system, both in the short run and in the long run, without neglecting the limits derived from the supply side.

Volume :- No.13 (2019)

Issue No :- 1 (2019)

Pages :- 1-19

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Endogenous money theory: horizontalists, structuralists and the credit market


Matteo Deleidi


This paper provides an empirical investigation of the endogenous money theory and of the internal debate between horizontalists and structuralists. To do this, SVAR models are implemented on monthly data for the euro area for the 2003–2017 period. The findings show that (i) the volume of loans is mainly affected by the level of demand rather than by credit supply conditions; (ii) the mark-up on bank loans is an exogenous variable, independent of the demand for credit and the volume of loans granted by banks; (iii) commercial banks are generally able to counterbalance a fall in profits – for example, driven by a price increase or a narrow credit supply conditions – through an increase of the mark-up; and (iv) an increase in the rate of growth of the economy reduces the mark-up by lowering the risk perceived by banks. These findings confirm both the relevant role played by demand forces in determining the banks’ loans and the horizontalist approach.

Volume :- No.13 (2019)

Issue No :- 1 (2019)

Pages :- 21-53

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A bit of Keynesian debt-to-GDP arithmetic for deficit-capped countries


Stefano Di Bucchianico


This paper expands some recent Keynesian debt-to-GDP arithmetic exercises in three respects. Firstly, it analyses the output and capacity losses associated with a ‘balanced budget’ fiscal policy. Secondly, the possible Keynesian features of a policy looking at the difference between the growth rate and the interest rate are also discussed, showing a condition which allows for a debt-to-GDP ratio reduction via primary deficit spending. Lastly, the minimum necessary fiscal multiplier values needed to make austerity policy counterproductive are calculated for the PIGS economies covering the 1998 – 2018 period. The results show the substantial case for the Keynesian arithmetic to hold.

Volume :- No.13 (2019)

Issue No :- 1 (2019)

Pages :- 55-83

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Decoupling Entrepreneurship Capital from Capital Stock


Dennis Ridley & Abdullah Khan


Per capita real gross domestic product adjusted for purchasing power parity (G) is parsimoniously explained by capitalism (C), democracy (D) and rule of law(R). G is estimated from a CDR index equal to the vector inner (dot) product of global invariant parameters [1.53 0.14 0.23 -1.21] and country specific [C D R C·D·R]. The data are for year 2014 and 79 countries that represent practically all people in the world. C is measured by total capitalization then split into human capital of entrepreneurship imagination and creativity and capital stock of knowledge, machines, computers, training, recording devices etc. The contribution of entrepreneurship to G is found to be 6 times that of capital stock.

Volume :- No.13 (2019)

Issue No :- 1 (2019)

Pages :- 85-94

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Book Reviews

The Political Economy of Public Debt: Three Centuries of Theory and Evidence, Cheltenham, UK and Northampton, MA, USA: Edward Elgar 2017. By Richard H. Salsman


Lefteris Tsoulfidis

Volume :- No.13 (2019)

Issue No :- 1 (2019)

Pages :- 95-106

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2018 12(2) - Reprint 2014 8(2)

Intensive Rent and Value in Ricardo


Christian Bidard


Ricardo`s statement that the marginal capital pays no rent is at the basis of his examination of the labour theory of value to the presence of lands. That statement has been recently criticized by Fratini in the case of intensive cultivation. We defend Ricardo`s position on that point. However, the reduction of a productive system with land to a single-product system is generally impossible, and for instance the trade-off property between wages and profits does not hold in general.

Volume :- No.12 (2018)

Issue No :- 2 (2018)

Pages :- 99-109

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Do Increased Private Saving Rates Spur Economic Growth?


Kazimierz Laski


Growth of aggregate demand at any given private saving rate depends on growth of private investment, export surplus and budget deficit. Slower growth of private investment in the mid-1970s has triggered stagnation trends in Europe`s developed economies, caused mainly by inadequate aggregate demand. The relation between aggregate demand and the propensity to save is analysed in the present paper using the model of ‘stunted growth` of Josef Steindl. The decreased utilization of capacity characteristic of stagnation can be counteracted by a reduction of the propensity to save. The most important factors determining the saving rate are distribution of incomes and the progressivity of the tax system. In many countries and periods, an inverse relation between the growth of GDP and of the private saving rate has been found and presented in the study.

Volume :- No.12 (2018)

Issue No :- 2 (2018)

Pages :- 111-144

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A Keynesian Recovery Policy for the European Union


Riccardo Fiorentini & Guido Montani


The European Council’s decision in February 2013 to cut the EU budget to 1% of GDP was a grave error, worsening the European economic recession and tacitly admitting that the European recovery policy is impossible. In this paper the authors show that with an annual EU budget of only 1.19% GDP, a recovery plan of 2% of GDP is possible, without deficit spending. The twofold aim of this exercise is to show that within the present legislative framework European parties and leaders can put forward an effective economic policy to overcome recession and that European fiscal imbalance is one of the major causes of the crisis of the European misgovernment. A more effective policy can be fostered with a limited federal debt.

Volume :- No.12 (2018)

Issue No :- 2 (2018)

Pages :- 145-174

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Extraversion and Crisis of the Greek Economy: A Study


George Economakis, Maria Markaki & George Androulakis


The Greek economy arose as the main ‘weak link’ in the global economic crisis because of the ‘extraverted’ model of Greek capitalism. It is this model that leads to systematic transfers of value to the imperialist countries forming the substratum of the current crisis. The crucial parameter of these transfers is the dissimilarity of the trade-production structure between the Greek economy and the hard core of its commercial competitors (Eurozone), which is expressed in Greek terms of trade deterioration.

Volume :- No.12 (2018)

Issue No :- 2 (2018)

Pages :- 175-204

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2018 12(1)

Announcement

Author :- -

Volume :- No.12 (2018)

Issue No :- 1 (2018)

Pages :- 1

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On the Hijacking of the Intellectual and Archival Legacy of Piero Sraffa: A Comment on Ajit Sinha (2016)—A Revolution in Economic Theory: The Economics of Piero Sraffa


Scott Carter


Ajit Sinha’s (2016) book purporting to be a thorough analysis of the intellectual and archival legacy of Piero Sraffa is subjected to the rigors of scholarly scrutiny where it is demonstrated that serious and egregious errors abound in terms of basic standards of archival scholarship. Also contained in the book are highly questionable interpretations and conclusions of Sraffa’s economic theory. The basic thrust of the article is that the reader of Sinha (2016) should at all times proceed with caution and be wary of the unsuspecting pitfalls and often disingenuous trappings of the book.

Volume :- No.12 (2018)

Issue No :- 1 (2018)

Pages :- 3-34

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Theories of Value and Ultimate Standards in Sraffa’s Notes of Summer 1927


Saverio M. Fratini


The group of manuscripts titled ‘Notes/London, Summer 1927/Physical real costs, etc.’ (D3/12/3) is recognized as extremely important for the reconstruction of the evolution of Sraffa’s thought after the articles published in 1925 and 1926. The present paper is aimed at analysing some relevant passages and ideas expressed by Sraffa in those manuscripts. We shall focus, in particular, on Sraffa’s arguments about the existence of two different theories of value, with different aims: one aimed at determining the value of large aggregates of commodities, such as the national product, the necessary consumption and the social surplus, and the other aimed at determining the price of a single commodity, separately from the others. In Sraffa’s view, if the values of many commodities are to be determined simultaneously, then the theory cannot dispense with an ultimate standard of value. That idea led Sraffa toward the conception (or the rediscovery) of the physical real cost.

Volume :- No.12 (2018)

Issue No :- 1 (2018)

Pages :- 35-53

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The Classical Theory of Wages and its Interpretations: A Critique of the Canonical Classical Model


Enrico Sergio Levrero


This paper aims to clarify the broad social and historical factors that determine income distribution according to Smith and Ricardo and show that the socalled “Canonical Classical Model” fails to interpret the Classical theory of wages both with regard to logic and on the basis of textual analysis. After reconstructing the circumstances determining the subsistence and surplus wage rates according to Smith and Ricardo, the paper critically analyses the idea that they determine the price of labour by means of the wage fund theory in the short run and functional relationships between the wage rate and the growth rates of capital and population in the long run.

Volume :- No.12 (2018)

Issue No :- 1 (2018)

Pages :- 55-76

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The “Solvency Rule” of the Central Banker in a Monetary Scheme of Reproduction


Emiliano Brancaccio & Domenico Suppa


An alternative interpretation of monetary policy suggests that central bankers are not able to manage the business cycle and inflation. Rather, they set interest rates and other monetary policy variables in order to regulate the conditions of solvency in the economic system and the related tendency towards “centralization” of capital. This “solvency rule” of central banks is determined here within a two-sector monetary scheme of reproduction in which some restrictive assumptions contained in previous versions are removed. The main result of this scheme is that any sort of “neutrality” of monetary policy must be excluded, not only from the points of view of the scale of production or the distribution of income, but also from that of the solvency conditions and the related centralization of capital in each sector of the economic system.

Volume :- No.12 (2018)

Issue No :- 1 (2018)

Pages :- 77-98

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2017 11(2)

Mathematical Principles of Monetary Econophysics with Application to Problem of Financial Stabilization


Valko Petrov


This paper presents a mathematical solution of the problem for financial stabilization. The exact statement of the problem is carried out in terms of the four conventional market values, involved in the famous Fisher equation of monetary circulation. The latter is subjected to sush named dynamic extension. Then, the conditions for occurrence of economic destabilization and cyclicality are deduced analytically. At the end, the final conclusion is made, that to escape the occurrence of the economic crisis cycles, it is necessary to sustain sufficiently high progressive taxation and respectively enough mass consumption.

Volume :- No.11 (2017)

Issue No :- 2 (2017)

Pages :- 75-104

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Transiting to a New Development Pattern? A Conceptual Analysis of New Dynamic Hypotheses Governing Development


Harris Topalides & Patroklos Georgiadis


Globalization and a shift in the dominant type of capital investments from physical to knowledge forms, emerging since 70’s had a major influence on industrial development pattern. This paper examines the dynamics of their impact, aiming to derive insights about modifications in the corresponding sustainability context. Introducing changes as new operation hypotheses in a dynamic model exhibiting industrial development pattern, it accesses conceptually their effects on the functions controlling capital accumulation and regulating capital intensity level that dominate its identity. Showing that model’s growth property alters, it induces that development pattern is changing and a new form of limits-to-growth emerges.

Volume :- No.11 (2017)

Issue No :- 2 (2017)

Pages :- 105-137

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An Appraisal of Unified Enterprise Income Tax Policy in China


Chien-hsun Chen, Chao-cheng Mai & Jhao-hsuan Hsu


This paper explores how the increase in income taxes in relation to foreign-funded enterprises affects the social welfare of China. The theoretical analysis indicates that increasing the income taxes levied on the foreign-funded firm tends to be beneficial to the social welfare of China. However, this tax policy may be detrimental to the social welfare of China only if the marginal cost of the domestic firm is higher than that of the foreign-funded firm, and this cost differential effect outweighs both the direct and strategic effects.

Volume :- No.11 (2017)

Issue No :- 2 (2017)

Pages :- 139-147

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Measures of Production Price-Labour Value Deviation and Income Distribution in Actual Economies: Theory and Empirical Evidence


Theodore Mariolis & Lefteris Tsoulfidis


Many empirical studies indicate that the deviations of actual prices of production from labour values are not too sensitive to the type of measure used for their evaluation. This paper attempts to theorize this rather ‘stylized fact’ by focusing on the relationships between the traditional and the numéraire-free measures of deviation. On the empirical side, it provides an illustration of these relationships using input-output data from Greek and Japanese economies.

Volume :- No.11 (2017)

Issue No :- 2 (2017)

Pages :- 151-170

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Book Review

Aristotle and Economics. Mélanges Historical and Economical (in Greek), 2012. By Christos P. Baloglou


Panayotis G. Fouyas


Volume :- No.11 (2017)

Issue No :- 2 (2017)

Pages :- 171-172

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2017 11(1)

Division of Human Capital Creates Surplus Wealth


Dennis Ridley


The results of an experimental abstraction of economic development for 79 countries resulting from their proximity to the highest form of capitalist economic adaptation, democracy and rule of law is reported. A structural contribution uses a least squares regression format to isolate and measure marginal effects of institutions on per capita real gross domestic product adjusted for purchasing power parity. Instead of focusing on natural resources, poor nations can improve their economic positions along a continuum by rearranging the institutional cultural priorities of capitalism, democracy and rule of law that promote trade and entrepreneurial development within their societal borders.

Volume :- No.11 (2017)

Issue No :- 1 (2017)

Pages :- 1-20

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IMF, Democracy and Economic Development


Nikolaos Alexandros Psofogiorgos and Theodore Metaxas


In this article, we are going to analyze all the aspects around the connection between IMF Democracy and Economic Development. When IMF gives large loans in a country, its need to protect its capital, leads in a mitigation of the passion with which the conditions are imposed. The impact of an IMF loan is marginally significant negative variable to democracy, according to some studies. On the other hand, by using the statistical procedure called “matching” method, we are going to have more credible estimates of the impact of the IMF on democracy. In this procedure, Jasjeet Sekhon’s genetic matching routine is used to generate balanced subsamples for both of outcome variables each treated case is paired with a control case via one-to-one nearest neighbor matching with replacement. Each case is matched on all of the confounding covariates. The result is the fact that IMF programs are associated with increases in the level of democracy. Also, countries that spend more time under the IMF lending programs experience big improvements in the level of democracy. The available theoretical and empirical observations show convincingly that the negotiation process allows governments borrowers to maintain some influence on the IMF program content and therefore on the redistributive impact of these programs. When there are low levels of competition, as in authoritarian regimes, political leaders have an incentive to use their monopoly power and the deficient in public services, whereas in democracies, where there is competition in politics, leaders operate as regulated monopolies, providing most public services in an effort to maintain the edge over their opponents. Finally, the effect of IMF involvement on crisis depends on the state of the economy. Despite the limitations in the extent of the article, we are going to include as much data as possible in order to create a spherical view about the connection between IMF, democracy and economic development.

Volume :- No.11 (2017)

Issue No :- 1 (2017)

Pages :- 21-44

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Brexit Decision Effects on European Derivatives Markets: A Sectoral Analysis


Nikolaos A. Kyriazis and Emmanouil M. L. Economou


This paper examines the Brexit’s referendum impacts on quotes of different sectors in the European derivatives market by employing a Vector Autoregression (VAR) approach for detecting bi-directional effects. During nine months after the affirmative decision about the United Kingdom (UK) leaving the European Union (EU), the primary importance British FTSE100 index is found to have influenced the prices of the highly representative of European futures markets Eurostoxx600 index and its components in a positive and statistically significant manner. Interestingly, Automobiles & Parts, Banks, Basic Resources, Construction & Materials, Oil & Gas, as well as Industrial Goods & Services are the futures sectors mostly affected by volatility in the British stock market. We argue that the Brexit decision effects mainly act through main secondary production sectors of the European economy, whereas reverse effects rely most on financial and banking services, telecommunications, as well as industrial and automobile goods.

Volume :- No.11 (2017)

Issue No :- 1 (2017)

Pages :- 45-58

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Social Accounting Matrix Multipliers for Greece


Charalampos Economidis and Paulin Mema


The aim of this paper is to calculate Social Accounting Matrix (SAM) multipliers for Greece for the year 2010. The SAM provides the so-called "direct effect", "indirect effect" and "closed loop" multipliers. The SAM sectors are divided into three categories, namely the industries of production, the remuneration of factors of production and the various kinds of income. The "direct effect" multiplier has a significant effect on the first and third categories. The "indirect effect" multiplier has a significant effect on the second and third categories while the "closed loop" multiplier has significant effects on the first second and third categories. Finally, the global multiplier has a greater effect than those of the "closed loop", "indirect effect" and "direct effect" multipliers combined.

Volume :- No.11 (2017)

Issue No :- 1 (2017)

Pages :- 59-73

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2016 10(2)

Testing Goodwin’s Growth Cycle Disaggregated Models: Evidence from the Input-Output Tables of the Greek Economy for the years 1988-1997


Nikolaos Rodousakis


This paper tests two of Goodwin’s growth cycle disaggregated models empirically, using data from the symmetric input-output tables of the Greek economy for the years 1988-1997. It is found from a qualitative as well as a quantitative point of view that both models are not adequate to describe the long-run workers’ share-employment rate trajectories of the Greek economy. However, in the medium-run analysis, the evidence presented here is more encouraging: at a qualitative level, one of the models considered is found to be adequate to describe the cyclical behaviour of the workers’ share and employment rate.

Volume :- No.10 (2016)

Issue No :- 2 (2016)

Pages :- 99-118

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The ‘Key-Sectors’ of the Greek Economy and the Question of ‘Productive Restructuring’


Maria Markaki & George Economakis


The contemporary profound and continuing crisis of the Greek economy raises the question of ‘productive restructuring’. The formulation of a plan for the ‘productive restructuring’ of the Greek economy must take into account the existing economic structure. The so-called ‘key-sectors’ of the economy constitute a crucial parameter of this structure and of the growth potential. This paper identifies the ‘key-sectors’ of the Greek economy.

Volume :- No.10 (2016)

Issue No :- 2 (2016)

Pages :- 119-135

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An Intersectoral Analysis of the Greek Economy: Evidence from the Symmetric Input-Output Tables for the years 2005 and 2010


Eirini Leriou, Theodore Mariolis & George Soklis


Using input-output table data and a system of basic and derivatives indices, this paper provides an intersectoral analysis of the Greek economy for the years 2005 and 2010. The findings suggest that, due to profound structural imbalances, (i) a well-targeted effective demand management policy could be mainly based on the service and primary production sectors; while (ii) industrial policy would be necessary and could primarily focus on nine highly import-dependent commodities of the industry sector.

Volume :- No.10 (2016)

Issue No :- 2 (2016)

Pages :- 137-159

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Price and Income Elasticities of Demand for Crude Oil. A study of thirteen OECD and Non-OECD Countries


Christos Tsirimokos & Georgios Maroulis


This study examines the determinants of crude oil demand in a panel of thirteen OECD and non-OECD countries constituting about 62% of global crude oil consumption in 2015. Panel unit root and panel cointegration techniques are employed for the estimation of price and income elasticities of crude oil demand. Estimated coefficients in the panel have a statistically significant impact on oil consumption both in the short-run and in the long-run. The empirical panel findings reveal that in the short-run, crude oil demand is price and income inelastic while in the long-run, crude oil demand is income elastic and price inelastic. On the other hand, the estimated coefficients on the price and income variables vary across countries and they are in most of the cases statistically significant.

Volume :- No.10 (2016)

Issue No :- 2 (2016)

Pages :- 161-180

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BOOK REVIEWS

Economic Phenomena in Antiquity, by Theodoros P. Lianos & George C. Bitros


Christos P. Baloglou


Volume :- No.10 (2016)

Issue No :- 2 (2016)

Pages :- 187

Article PDF


Aristotle’s Political Economy, by Theodoros P. Lianos


Christos P. Baloglou


Volume :- No.10 (2016)

Issue No :- 2 (2016)

Pages :- 181

Article PDF

2016 10(1)

The Sraffian Multiplier and the Key-Commodities for the Greek Economy: Evidence from the Input-Output Tables for the Period 2000-2010


Nikolaos Ntemiroglou


The scope of this paper is to specify the ‘key-commodities’ for the Greek economy through the estimation of the ‘static’ Sraffian multiplier and the related employment multipliers for the years 2000, 2005 and 2010. Although a positive trend in the output multiplier was found over time, the employment multipliers declined. It was found that a management of effective demand shall target on the primary and service sector in short term, but in the long run structural changes and strengthening of inter-sectoral relations are necessary in the industry.

Volume :- No.10 (2016)

Issue No :- 1 (2016)

Pages :- 1-24

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Economy of Greece: An Evaluation of Real Sector


Nicholas Olenev


The paper presents an evaluation of recent changes for real sector of Greek economy by an original vintage capital model with putty-clay technology. At a given capital intensity and a given depreciation rate they can evaluate age structure of production capacities by past real investments. External parameters can be determined by comparison of pairs of time series for each macroeconomic index: first calculated by the model and second took from data of its statistical analog. The identified parameters are used for calculation the production capacity dynamics of the immediate past and can be used for forecasts of the immediate future.

Volume :- No.10 (2016)

Issue No :- 1 (2016)

Pages :- 25-37

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Transatlantic Trade and Investment Partnership: Implications to the European South


Evgenia Katraki & Christos Vatalachos


According to its proponents, the TTIP is the most important trade negotiation underway in the European Union (EU) and the USA aiming at creating the world’s largest free trade area. With the purpose of making the trade of goods and services easier with the least possible impediments, a number of issues have been raised regarding the implementation of the TTIP with respect to the allocation of costs and benefits to people in both the EU and the USA. It has been argued that the agreement will benefit more the growth rate in the USA than that of the EU whose regional disparities are expected to increase. In this context, one would suppose that at least a part of the benefits accruing to the USA will be allocated in the effort to ameliorate the disparities especial in the EU Southern countries.

Volume :- No.10 (2016)

Issue No :- 1 (2016)

Pages :- 39-55

Article PDF


Research: Facts, Science, and Theory


Shri Prakash & Amit Sharma


The paper explains the concepts and nature of theory, science, facts and types of facts. Features of different types of facts and their importance are described briefly in order to elaborately explain their role and functions in scientific research. The paper highlights the process of transformation of common into scientific facts. Theory is postulated to furnish the framework of scientific research. Research by its very nature focuses on relating one fact with one or more facts in a causal relationship. This necessitates accession and exploration of facts which are the subject matter of study. The forging of causal relations between facts involves examination and analysis to focus on the detection of systematic patterns of changes in values and their relationship. The results of analysis need explanation of inter-relations between facts. Scientific theory emerges from the pivotal relations between facts, which are bound together in a causal relation. This paper extends this paradigm of research in natural and physical sciences to encompass social science research in its domain; it postulates that social sciences also endeavor to forge causal relations between social facts through research. Therefore, theories of social sciences also involve the formulation of concepts/constructs, and the adoption of specific assumptions which underlie these theories. The formulation of hypotheses, their testing, verification and validation are postulated as the basic functions of scientific social science research.

Volume :- No.10 (2016)

Issue No :- 1 (2016)

Pages :- 57-97

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2015 9(2)

Assessing US Policies for Health Care through the Dynamic CGE Approach


Claudio Socci, Maurizio Ciaschini Rosita Pretaroli & Francesca Severini


The sustainability of the health care expenditure is a topic that at the present time is strongly discussed in the literature. Indeed the “health industry” can be considered as a strategic one within the industries that shape the economy, since it is able to stimulate many other production processes, within the economy, that activate, at their turn, the sectoral income generation. Thus the policy maker has the possibility of implementing a policy, in health care, able to achieve a composite objective: the level of public health care expenditure should be made consistent with the growth path of the economy sought after, both in the aggregate and in its sectoral composition. In this work we concentrate on health expenditure and income generation trying to verify the impact of a change in the inner composition of the health care demands. Our aim is that of determining the impacts of the announced new allocation of health care expenditure in U.S. alongside the multisectoral income circular flow. We develop a dynamic CGE model, calibrated on an USA Social Accounting Matrix that we have purposely built, in which health care reform and its direct and indirect effects on the main macroeconomic variables are determined and quantified.

Volume :- No.9 (2015)

Issue No :- 2 (2015)

Pages :- 93-126

Article PDF


Farm Production Costs, Producer Prices and Retail Food Prices in Greece: A Cointegration Analysis


Christos P. Pappas & Christos T. Papadas


The relationship between farm production costs, producer prices and retail food prices has been quite often the subject of research. This study examines the existence of cointegrating relationships and the direction of causality between these variables in Greece. The data used refer to price indices of farm inputs and outputs for crop and livestock production and retail price indices for food and non-alcoholic beverages. The stationarity of the time series is examined using the alternative econometric tests of the literature. The Johansen procedure verifies the existence of a long run equilibrium relationship. Both, the Maximum Eigenvalue test and the Trace test confirm the existence of one only cointegrating relationship. Alternative formulations of the linear long run equilibrium relationship are examined within the Johansen context and the short and long run causality directions are investigated. It is found that in the short and long run, production costs and producer prices “influence” retail food prices. In addition to the estimated cointegrating relationship, the estimated Vector Error Correction Model provides information on the speed and adjustment process towards the long run equilibrium.

Volume :- No.9 (2015)

Issue No :- 2 (2015)

Pages :- 127-143

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Industry Outputs Arising from the Implementation of the Medium-Term Fiscal Strategy 2013-2016 for the Greek Economy


Manolis Bousounis & Charalampos Economidis


The aim of this paper is to estimate the output vector of the Greek economy for the year 2015 based on the implementation of the Medium-Term Fiscal Strategy 2013-2016, and to make a comparative presentation of the output vectors for the years 2010 and 2015. The 2015 output vector is estimated using two different estimating methods, the first based on the Symmetric Input-Output Table (SIOT) and the second on the Supply and Use Table (SUT). The results show an increase in output of most industries and changes in the composition of sectoral outputs of the Greek economy. However, the available empirical evidence is in stark contrast to these estimates.

Volume :- No.9 (2015)

Issue No :- 2 (2015)

Pages :- 145-159

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Testing Bienenfeld’s Second-Order Approximation for the Wage-Profit Curve


Theodore Mariolis


This paper constructs Bielefeld’s second-order approximation for the wage-profit curve and tests it using data from ten symmetric input-output tables of the Greek economy. The results suggest that there is room for using low-dimensional models as surrogates for actual single-product economies.

Volume :- No.9 (2015)

Issue No :- 2 (2015)

Pages :- 161-170

Article PDF


Book Review

Author :- -

Volume :- No.9 (2015)

Issue No :- 2 (2015)

Pages :- 171-172

Article PDF

2015 9(1)

Labour versus Alternative Value Bases in Actual Joint Production Systems


George Soklis


This paper extends the empirical investigation of the relationships between actual prices, labour values and commodity values to the case of joint production using data from the Supply and Use Tables of the Finnish (for the year 2004) and Japanese (for the year 2000) economies. Our findings show that (i) the systems under investigation do not have the usual properties of single-product systems; (ii) in the case of the Finnish economy, the exploration of the relationships between prices and additive labour values is without economic meaning; and (iii) in the case of the Japanese economy, there exist vectors of additive commodity values that are better approximations of actual prices than additive labour values. Thus, it is argued that the claim that actual economic systems can be adequately interpreted in terms of labour values is open to serious doubts.

Volume :- No.9 (2015)

Issue No :- 1 (2015)

Pages :- 1-31

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Financing Investment under Fundamental Uncertainty and Instability: A Heterodox Microeconomic View


Tae-Hee Jo


This study inquires into investment and finance decisions as they are related to other decisions within the going business enterprise embedded in the monetary social provisioning process. When it comes to investment and finance, business enterprises’ strategic decisions often escape notice by heterodox macroeconomists. In place of strategic decisions, financing and investment are mainly looked at through the operation of the financial market in which the supply of and demand for investment funds are coordinated by the prices of funds. Consequently, heterodox macroeconomic theory of investment and finance deals mainly with external financing. In this article I argue that that the strategically generated internal means of finance is the main source of fixed investment, especially when the economy is in recession or economic instability is increasing. The positive empirical relationship between external finance and fixed investment is hardly discerned. Even the financialization of non-financial corporations in recent decades has not reduced the importance of internal financing over external financing.

Volume :- No.9 (2015)

Issue No :- 1 (2015)

Pages :- 33-54

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The Declining Educational Wage Premium and the Labour Process: Evidence from 15 Selected OECD Countries


Ioannis Vardalachakis & Persefoni Tsaliki


In the present paper we assess the validity of the dominant upskilling approach, according to which the technological advancements upgrade the skills demanded in labour process and lead eventually to higher remuneration and employment for skillful workers. However, the results from 15 OECD countries show that the skill-premium received by tertiary educated workers fails to serve as a possible interpretation of the widening wage differentials. The findings encourage research within the classical political economy deskilling according to which wages are determined by thesocially necessary labour time required for their skill acquisition.

Volume :- No.9 (2015)

Issue No :- 1 (2015)

Pages :- 55-67

Article PDF


Business Cycles and Economic Crisis: The Case of Car Sales in Athens, Greece (2000-2012)


Panayotis G. Michaelides & Konstantinos N. Konstantakis


Greece is widely hailed to be among the most prominent victims of the recent global recession. Since the downfall of its economic activity, caused by local and international factors, it has reached levels that are directly comparable only to the Great Recession. In this context, we attempt to shed light on a prominent victim of this situation, i.e. the car sales industry in Athens, Greece over the time period 2000-2012 using monthly data. To this end, an appropriate econometric model, that incorporates a large number of potential determinants, which account for relevant factors, is used and several econometric techniques are employed such as stationarity testing; filtering; white noise testing; periodicity analysis; correlation analysis and causality testing. Our empirical investigation determines the macroeconomic and other variables that act either as pro- or countercyclical factors in business cycles fluctuations of the car sales industry in Athens.

Volume :- No.9 (2015)

Issue No :- 1 (2015)

Pages :- 69-83

Article PDF


Frederic S. Lee and the Challenges for Heterodox Economics


Carlo D’ippoliti


October 2014 we had to withstand the passing of Fred Lee, one scholar who most, if not all, heterodox economists considered a friend. His name was respected and appreciated by the several individuals, associations and institutions that sent messages of grief. Fred’s legacy encompasses a thriving community of engaged scholars that will try, and hopefully succeed, to create a progressive economic science. However, along with the memory of his company and the inspiration of his work, Fred Lee passed away before a number of challenges to his lifetime goal – the development of heterodox economics – have been fully solved.

Volume :- No.9 (2015)

Issue No :- 1 (2015)

Pages :- 85-91

Article PDF

2014 8(2)

Abstracts

Intensive Rent and Value in Ricardo


Christian Bidard


Ricardo's statement that the marginal capital pays no rent is at the basis of his extension of the labour theory of value to the presence of lands. That statement has been recently criticised by Fratini in the case of intensive cultivation. We defend Ricardo’s position on that point. However, the reduction of a productive system with land to a single-product system is generally impossible, and for instance the trade-off property between wages and profits does not hold in general.


Do Increased Private Saving Rates Spur Economic Growth?


Kazimierz Laski


Growth of aggregate demand at any given private saving rate depends on growth of private investment, export surplus and budget deficit. Slower growth of private investment in the mid-1970s has triggered stagnation trends in Europe’s developed economies, caused mainly by inadequate aggregate demand. The relation between aggregate demand and the propensity to save is analysed in the present paper using the model of ‘stunted growth’ of Josef Steindl. The decreased utilization of capacity characteristic of stagnation can be counteracted by a reduction of the propensity to save. The most important factors determining the saving rate are distribution of incomes and the progressivity of the tax system. In many countries and periods, an inverse relation between the growth of GDP and of the private saving rate has been found and presented in the study.


A Keynesian Recovery Policy for the European Union


Riccardo Fiorentini & Guido Montani


The European Council’s decision in February 2013 to cut the EU budget to 1% of GDP was a grave error, worsening the European economic recession and tacitly admitting that a European recovery policy is impossible. In this paper the authors show that with an annual EU budget of only 1.19% of GDP, a recovery plan of 2% of GDP is possible, without deficit spending. The twofold aim of this exercise is to show that within the present legislative framework European parties and leaders can put forward an effective economic policy to overcome recession and that European fiscal imbalance is one of the major causes of the crisis of the European misgovernment. A more effective policy can be fostered with a limited federal debt.


Extraversion and Crisis of the Greek Economy: A Study


George Economakis, Maria Markaki & George Androulakis


The Greek economy arose as the main ‘weak link’ in the global economic crisis because of the ‘extraverted’ model of Greek capitalism. It is this model that leads to systematic transfers of value to the imperialist countries forming the substratum of the current crisis. The crucial parameter of these transfers is the dissimilarity of trade-production structure between the Greek economy and the hard core of its commercial competitors (Eurozone), which is expressed in Greek terms of trade deterioration.

2014 8(1)

Abstracts

Mathematical Principles of Monetary Econophysics with Application to Problem of Financial Stabilization


Valko Petrov


This paper presents a mathematical solution of the problem for financial stabilization. The exact statement of the problem is carried out in terms of the four conventional market values, involved in the famous Fisher equation of monetary circulation. The latter is subjected to sush named dynamic extension. Then, the conditions for occurrence of economic destabilization and cyclicality are deduced analytically. At the end, the final conclusion is made, that to escape the occurrence of economic crisis cycles, it is necessary to sustain sufficiently high progressive taxation and respectively enough mass consumption.


Transiting to a New Development Pattern? A Conceptual Analysis of New Dynamic Hypotheses Governing Development


Harris Topalides & Patroklos Georgiadis


Globalization and a shift in the dominant type of capital investments from physical to knowledge forms, emerging since 70’s had a major influence on industrial development pattern. This paper examines the dynamics of their impact, aiming to derive insights about modifications in the corresponding sustainability context. Introducing changes as new operation hypotheses in a dynamic model exhibiting industrial development pattern, it accesses conceptually their effects on the functions controlling capital accumulation and regulating capital intensity level, that dominate its identity. Showing that model’s growth property alters, it induces that development pattern is changing and a new form of limits-to-growth emerges.


An Appraisal of Unified Enterprise Income Tax Policy in China


Chien-Hsun Chen, Chao-Cheng Mai & Jhao-Hsuan Hsu


This paper explores how the increase in income taxes in relation to foreign-funded enterprises affects the social welfare of China. The theoretical analysis indicates that increasing the income taxes levied on the foreign-funded firm tends to be beneficial to the social welfare of China. However, this tax policy may be detrimental to the social welfare of China only if the marginal cost of the domestic firm is higher than that of the foreign-funded firm, and this cost differential effect outweighs both the direct and strategic effects.


Measures of Production Price-Labour Value Deviation and Income Distribution in Actual Economies: Theory and Empirical Evidence


Theodore Mariolis & Lefteris Tsoulfidis


Many empirical studies indicate that the deviations of actual prices of production from labour values are not too sensitive to the type of measure used for their evaluation. This paper attempts to theorize this rather ‘stylized fact’ by focusing on the relationships between the traditional and the numéraire-free measures of deviation. On the empirical side, it provides an illustration of these relationships using input-output data from the Greek and Japanese economies.


Book Review

Aristotle and Economics. Mélanges Historical and Economical


Panayotis G. Fouyas

2013 7(2)

Abstracts

Fiscal Policy and Economic Perspectives: An Assessment of the Transitional and Steady State Effects


Christos F. Stournaras


The dynamic effects of fiscal policy in terms of budget deficits and the concomitant implications of public debt have been the dominant issues in macroeconomic literature. Of particular concern is the choice of the life horizon (finite or infinite) of economic agents, since it remains crucial for the characterisation of the transition process towards the steady state of the economy. This paper develops a simple equilibrium model suitable to examine such issues. The first part analyses the solvency constraint of the private sector, in the presence of a government, by focusing on the dynamic behaviour of savings, consumption and asset allocation. The second part explores the steady-state effects of fiscal policy, by clarifying the role of government spending and public debt in determining interest rates. A modified index of fiscal stance is then derived that embraces the effects of current and anticipated fiscal policy, including the effects of government finance, on aggregate demand.


Determination of Prices as Comparison of Market Prices to Natural Prices: Input Output Analysis of Japan for 1951-2000


Akiko Nakajima


Natural prices, i.e., value relative prices (prices relative to the total labour required to produce each commodity) are identically equal to income equalizing prices when capital costs are proportioned to capital goods’ supplying sectors. This paper constructs natural prices as income equaling prices and they are compared to market prices. Empirical findings show that the gap between natural prices and market prices decrease over time according to one data set. According to another data set, gap between natural prices and market prices widens at times when the economy is in boom. International competition decreases the gap. Profitable industries at profitable periods increase the gap.


NAIRU: Studying its Theoretical Background and Implications


Vasiliki Bozani


The current paper is a means of demonstrating our knowledge about macroeconomic theories, and its key variables, phenomena, and history. Given the pivotal role that the Non-Accelerating Inflation Rate of Unemployment (NAIRU) has in the macroeconomic theory as well as its role in determining employment theories, the need is raised for a thorough evaluation of its origins and a brief explanation of some of the claims surrounding it. On these grounds, this study aims at integrating and generalizing findings and presenting the changes within the macroeconomic field over the years by investigating theories, identifying the methodological strengths and the weaknesses in the body of the macroeconomic research about the concept of NAIRU. In order to help the reader to avoid misunderstandings we define the best descriptors and identify the best sources to use in the review literature related to our topic, we rely on primary sources in reviewing the literature, we examine all aspects of the research design and analysis, and we consider contrary findings and alternative interpretations in synthesizing quantitative literature.


Critical Realism: The Philosophical Underlabourer of Heterodox Economics


Paschalis A. Arvanitidis


One of the most refreshing philosophical perspectives introduced to economics and to social sciences in general over the last twenty years or so is this of Critical Realism (CR). It presents a new way of seeing socioeconomic reality, and, on these grounds, it advances discussion in philosophy and methodology, providing guidelines of how modes of reasoning and research might be fashioned for analysis within all sciences, social and natural. The current paper aims at presenting the fundamentals of the philosophy of CR. In particular, it delineates the key ontological and epistemological premises of CR together with an outline of the methodological implications for economics.


Book Review

Dynamics of Underdevelopment of Uttar Pradesh


Grigoris Zarotiadis

2013 7(1)

Abstracts

The Cost of Fiscal Disunion in Europe and the New Model of Fiscal Federalism


Guido Montani


The sovereign debts crisis is a problem peculiar to the European Union caused by the fragility of the EMU, which was set up without a fiscal union nor a federal government. The aim of a monetary union is to remove the political risks – exchange rates and sovereign debt default – for internal financial transactions, as the US have done thanks to their federal constitution. In Europe, the financial crisis has caused a dangerous vicious debts-banks cycle, which can bring on the default of solvent but illiquid states of the EMU. The paper, after an analysis of the emergency measures approved or proposed, upholds that a new model of fiscal federalism is underway, based on the following principles: the relative autonomy of monetary policy from fiscal policy; hard budget constraints for every level of government; a limited transfer union; an autonomous federal budget. At present, the role of the EU budget is neglected. The author warns that a well-run monetary union cannot work smoothly without a federal budget.


Exchange Rates, Monetary Aggregates, and Inflation


Jerry Mushin


This article is an examination of the distribution of the types of exchange-rate policy and of monetary policy that are in use in 2011. Exchange‑rate systems range from free floating, in which intervention occurs only exceptionally, to hard pegs, in which a country has no monetary sovereignty. Monetary‑policy systems include exchange‑rate anchors, monetary‑aggregate targets, and inflation targets. Large economies are likely to use floating régimes and inflation targets. Small economies are likely to use hard pegs, which require the use of an exchange‑rate anchor, or soft pegs, which are likely to be combined with monetary‑aggregate targeting.


The Ongoing Crisis: Questions for Keynesian Theory


Davide Gualerzi


The financial crisis and the 2008-2009 recession is now an ongoing crisis that is far from being resolved. It poses fundamental questions of theory and policy and they are not much addressed in the current debate and research. The paper asks the question of the nature of the crisis and why it is indeed different from those of the last thirty years. Because of that it is hardly manageable by the tools of standard theory and also by traditional anti-cyclical Keynesian policies. Thus the second point is that it requires reconsideration of the role of government. In the US the Federal Reserve despite criticism pursues a policy of monetary easing that reflects the concern for a persisting high unemployment. In Europe the reestablished doctrine of fiscal austerity intersects with the conflicting interests within the euro-zone that seem at times to call into question the very existence of the common currency. Both approaches have severe limitations. The main question for a sustained recovery is that of a new possible growth pattern. The paper discusses that by focusing on the leading sectors that are most promising in the way of a growth of private investment, which has close links to technological development. Reacting to the criticism by prominent Keynesian such as Krugman, who has argued for a much stronger stimulus the paper argues that any recovery driven by private investment need a change in the role of government. Indeed the crisis calls for a rethinking of Keynesian theory and policy.


Structural Transformation, the Agro-Food Sector, and Economic Growth in Central Eastern Europe. An Input-Output Analysis


Dimitrios Kyrkilis, Evangelos Nikolaidis & Charalambos Economidis


The concern of the current paper is the evolution of the position of agriculture and the agro-food production system at large in the economic structure in four transition countries of Central and Eastern Europe, namely Poland, Hungary, the Czech Republic, and Slovakia; applying the input – output analytical technique. In particular, a number of inter-sectoral linkage indices, including the normalized ones are constructed, estimated, and compared between two time periods during and after transition. The results of the exercise show that domestic backward and forward inter-industry linkages of both the primary sector and the food–beverages industry, contrary to expectations have become weaker in the examined countries during and after transition.


2012 6(2)

Abstracts

Heterodox Surplus Approach: Production, Prices, and Value Theory


Frederic S. Lee


In this article I argue that there is a heterodox social surplus approach that has its own account of output-employment and prices, and its own value theory. In the first two sections, the heterodox model of the economy is delineated with respect to the social surplus and social provisioning, followed in the third and fourth sections with the development of a pricing model and an output-employment model. In the fifth section the results of the previous four sections are brought together to develop a model of the economy. The article concludes with the delineation of the heterodox theory of value.


The Rate of Interest as a Macroeconomic Distribution Parameter: Horizontalism and Post-Keynesian Models of Distribution and Growth


Eckhard Hein


We review the main arguments put forward against the horizontalist view of endogenous credit and money and an exogenous rate of interest under the control of monetary policies. We argue that the structuralist arguments put forward in favour of an endogenously increasing interest rate when investment and economic activity are rising, due to increasing indebtedness of the firm sector or decreasing liquidity in the commercial bank sector, raise major doubts from a macroeconomic perspective. This is shown by means of examining the effect of increasing capital accumulation on the debt-capital ratio of the firm sector in a simple Kaleckian distribution and growth model. In particular we show that rising (falling) capital accumulation may be associated with a falling (rising) debt-capital ratio for the economy as a whole and hence with the ‘paradox of debt’. Therefore, the treatment of the rate of interest as an exogenous macroeconomic distribution parameter in Post-Keynesian distribution and growth models seems to be well founded.


A Remark on Intensive Differential Rent and the Labour Theory of Value in Ricardo


Saverio M. Fratini


In the Principles, Ricardo defended his labour theory of value by arguing that even where all cultivated land pays rent, the last dose of capital employed on the land does not and there is therefore no rent in the price of the product of this capital. We will show, on the contrary, that the intensive differential rent paid on land of the worst quality under cultivation enters into the agricultural product price and so, even in the most favourable case, commodities are no longer exchanged at prices based on the quantities of labour they embody.


Growth Effect of Foreign Investment on Indian Economy


Shri Prakash & Ritisnigdha Panigrahi


The paper deals with the output effect of foreign investment (FI) in different sectors of the Indian economy. Final demand vector of I-O model has foreign investment alone as non-zero elements. FI promotes growth of output of all sectors, including those having no FI Amount of FI and linkages of sectors, receiving foreign investment, are the main determinants of output effect of FI. But output effect of FI varies sharply between sectors according to the magnitude of investment and intensity and spread of linkages. Miscellaneous manufacturing shows maximum output growth due to FI.


Book Review

A Modern Guide to Keynesian Macroeconomics and Economic Policies, by Eckhard Hein & Engelbert Stockhammer


Thomas Dallery


2012 6(1)

Abstracts

World Trade and World Money. A Neoricardian Outlook on Global Economy


Guido Montani


This paper examines some international aspects of Ricardo’s economic theory. The theory of comparative costs is considered a special case of a more general theory of economic integration, showing that the final stage of economic integration, when capital and workers freely circulate in the global market, is a world economic union. Ricardo worked out also a theory of the international gold standard. He came to the conclusion that, when banknotes circulate alongside gold, the central bank should be entrusted to a public agency, independent of national power and with a precise target for the issue of banknotes. These “cosmopolitan” positions suggest that in the present international economy, a world governance capable of guaranteeing monetary stability and free trade should be entrusted to supranational institutions, similar to those existing in the European Union.


Towards a Post-Keynesian Perspective of Mexican Manufacturing pricing: An Approximation


Rogelio Huerta Quintanilla & Ivan Mendieta Muñoz


The current paper aims to appraise the role of costs and demand in determining manufacturing prices in Mexico using modern time-series econometric techniques for the period of 1996 to 2007. Therefore, as a piece of econometric work, the paper tries to provide an insight into the dynamics of manufacturing pricing in Mexico. This might be of particular relevance since in recent years and for the Mexican economy there have been few studies dealing with the matter at issue.


Corporate Social Responsibility and Human Development


Giulio Guarini


Here I illustrate an original framework within which to consider the role of Corporate Social Responsibility (CSR), defined as socioeconomic innovation, on development process by a cost-benefit analysis. CSR can generate costs of implementation and some costs in terms of community development. On the other hand, CSR can generate business benefits for firm and benefits for local community both directly, by producing public goods, and indirectly by sustaining civil society and public institutions in order to promote development process oriented to individual and collective well-being.


Deficit Paranoia and Unemployment: A Critical Perspective


Constantinos Alexiou


The purpose of the paper is to provide a conceptual perspective on the potential merits of deficits as well as to assess the relevance of the NAIRU concept, by touching on the fundamental arguments for and against public deficits. In periods of economic austerity, structural deficits can have stimulating effects on economic growth. Policy makers should pursue a high-employment deficit target such that the debt-to-GDP ratio remains constant. The NAIRU is a rather antiquated notion that has to be carefully reconsidered. The existing mechanism reflected by the dominant neoliberal doctrine has put paid to any adjustment efforts to consolidate the economies; hence, adding further to the problem by transferring the entire burden of adjustment to labor markets. Instead of striving to eliminate deficit regardless of the shape of the economy, we should try and pursue a deficit that is sufficiently large to provide the effective demand for all of the goods and services the economy can generate. The effects of cumulative causation can lead to a chain reaction capable of putting the economy on the road to recovery.


2011 5(2)

Abstracts


Alexis Ioannides & Stavros Mavroudeas


As Marx, but also Chapman and Robbins argued, working time and labour intensity are strongly and negatively correlated. Nevertheless, the models for this interaction presented so far don’t integrate their ideas. We construct a model for the time – intensity relationship that is mainly based on the natural limitations of the human body and reflects Marx’s main theses. We explore it’s consequences on product, value and surplus value. Finally we find support for the basic assumptions of this model with the help of the results of contemporary ergo-metric experiments.



Richard Grabowski


India’s recent economic success is plagued with several problems: slow structural change, little growth in labor intensive manufacturing, slowing agricultural growth, and significant debt problems. It will be argued that these problems are interlinked and are in turn related to the type of industrialization process that has unfolded. Significant investment in agriculture is the key to resolving these issues. The experience of China and Japan is used to illustrate how this resolution might unfold in India.



Purusottam Nayak & Bidisha Mahanta


The present paper is an attempt to analyze the status of women empowerment in India using various indicators based on data from secondary sources. The study reveals that women of India are relatively disempowered and they enjoy somewhat lower status than that of men in spite of many efforts undertaken by government. Gender gap exists regarding access to education and employment. Household decision making power and freedom of movement of women vary considerably with their age, education and employment status. It is found that acceptance of unequal gender norms by women are still prevailing in the society. More than half of the women believe wife beating to be justified for one reason or the other. Fewer women have final say on how to spend their earnings. Control over cash earnings increases with age, education and with place of residence. Women’s exposure to media is also less relative to men. Rural women are more prone to domestic violence than that of urban women. A large gender gap exists in political participation too. The study concludes by an observation that access to education and employment are only the enabling factors to empowerment, achievement towards the goal, however, depends largely on the attitude of the people towards gender equality.



Masudul Alam Choudhury


This paper is an introduction to the epistemological formalism of Islamic political economy and its application to the case study of socioeconomic development of the Sultanate of Oman. A relational epistemology of development planning emanating from the episteme of Oneness of God as the Islamic worldview of unity of knowledge is conceptualised and made empirically viable by combining statistical quantification and real-time simulation in the spatial dimension. These two estimation approaches and the empirical results are sequentially interconnected; showing how statistical results that are always static in nature can be dynamically represented by real-time and knowledge-induced (epistemological) graphical simulation in spatial domains. The policy implication underlying the normative issues interconnecting the statistical results and the spatial dimension simulation results is pointed out. The case study of development planning for the Manufacturing and Petroleum inter-sectoral GDP and total employment relations for the Sultanate of Oman is considered.


Book Review

The Coming of Age of Information Technologies and the Path of Transformational Growth, by Davide Gualerzi


Oscar Dejuan

2011 5(1)

Abstracts


Peter Flaschel, Sigrid Luchtenberg & Christian Proaño


The paper takes its point of departure from the current multifaceted financial crisis in the World economy. It considers against this background different concepts of the "Welfare States" (for short: good, bad and ugly), their recent focused reformulation of the good case through flexicurity proposals, and the modeling of such an economy in a recent issue of this Journal. It then proposes an extension of this labor-market oriented flexicurity concept towards a more balanced system, called "Social Capitalism", where households’ life-course perspectives, the educational system and elite formation are considered as the fundamental pillars of such a society. We then argue that such an ideal social architecture for a capitalist society can be an important guide for the formulation of compromises between the current status quo of a small Euro-economy (here Greece), allowing thereby for a significant alternative to the proposals that are currently debated with respect to the Greek situation. We consider the addition of such a tentative reform proposal as best scenario among the given ones. We understand the Greek economic and political crisis situation as an opportunity for significant if not radical reforms, by contrasting it with a return to the Drachma as the worst scenario.



Gerhard Jandl


The paper discusses parallels between the Austrian School of Economics’ teachings and the current crisis and argues for decision makers to take economic theory into consideration. Menger, putting the human being and his desires at the center of economic theory, advocates an allocation allowing utility for a maximum of individuals, excluding extra profits for only a few, thus a ‘perfect’ market. Hayek says markets will function if prices – important signals to the agents – are formed without interference. Tempering (money injection, deficit spending, fiscal expansion, interest rates lowering) distorts their informative nature, lead into malinvestment and depression. Schumpeter predicts the downfall of capitalism because the chances for extra profits through innovations create imitators until the system collapses. An “economical”, votes maximizing, behavior of politicians adds to that. And he warns of some of the very policies being applied in today’s crisis.



Kankesu Jayanthakumaran & Shao-Wei Lee


This paper examines the association between inward foreign direct investment (FDI) and exports in Taiwan and China in their economic development process by using Lumsdaine and Papell approach that allows two endogenous structural breaks. The causal relationships are studied using the Johansen and Juselius cointegration approach and Granger causality tests. Results show that the detected breaks and causal relationships in the FDI and export time series are coincided with extensive government effort, mainly in the form of export processing zones, during a transition period from import substitution to export orientation.



R. Hemalatha


Education is that service which has manifold effects on the provider, the state, the receiver, the individual, his family and the environment, the society. This important position of education has become a topic of research for quite sometime now. The contribution has been measured by economists using (i) bi-variate regression-correlation analysis of linking education to income, GDP, productivity etc.; (ii) rate of return analysis; and (iii) input-output linkage effect measured using Leontief’s inverse. The first two methods have been under the cloud of criticism on methodological and data availability, but the input-output analysis has been very rarely used. This paper is an attempt to measure the linkage effects in India over four enumeration years from 1983-84 to 1998-99. This linkage analysis which includes the direct, total and residentiary for a long period enables temporal analysis of the changes that have moulded the sector post-independence and during the globalization era. It has been found that the sector has been undergoing positive changes over the period and has been contributing to each and every sector of the economy.


2010 4(2)

Abstracts

Special Issue: Technology and Economic Analysis

Guest Editor: PANAYOTIS G. MICHAELIDES


What Drives the Process of Creative Destruction?


Dieter Bögenhold


Joseph A. Schumpeter (JAS) is regarded as one of the most prominent economists of the 20th century. He is known as the theorist of innovation, entrepreneurship and dynamics of capitalism. JAS's view of an evolutionary economy is often summarized as a never-ending process of “creative destruction”. Less known is the diversity of JAS's writings and his truly interdisciplinary scientific approach referring to lessons of history, sociology, psychology and further disciplines. In this context, he could be regarded as pioneer of a research tradition which is commonly called socioeconomics. The paper focuses on two topics of JAS's writings: (i) the behavioural assumptions for entrepreneurial activity, and (ii) Schumpeter's methodological concerns doing economic research. In fact, JAS developed a typology of entrepreneurial motivation based on human motivation and psychological concerns which are non-economic in nature. Also, JAS created an interdisciplinary working scheme merging institutional and multidisciplinary factors which is commonly called socioeconomics.


Why Did Scarcity Triumph Over Technology in Ricardo’s Thinking?


George E. Economakis & Dimitris P. Sotiropoulos


Ricardo was rather pessimist of the development of technology in the process of capital accumulation. Due to the fact that the dynamic of technology was unable to triumph over land scarcity, landowners claims rendered totally baseless and working class demands rendered simply futile within Ricardo’s theoretical framework. This attitude cannot be easily explained given that he wrote in the middle of the Industrial Revolution. We shall argue that Ricardo’s analytical insights helped the shaping of the political strategy of the industrial capital, providing the adequate theoretical background for the foundation of its political assertions during the first phase of the Industrial Revolution.


Technological Progress and the Labor Market: Sumner Slichter Revisited


Ioannis A. Katselidis


Sumner Slichter has been characterized as “perhaps the most influential industrial economist in America” during the first half of the 20th century. However, little attention has been paid to his works. This paper analyzes Slichter’s ideas regarding the effect of technological change on the labor market performance. Slichter, by emphasising on the role of technical change, contested the statement of Say’s law that full equilibrium would be ensured by the functioning of market forces and tried to explain the inability of the economic system to readjust and absorb the unemployed workers. Furthermore, another remarkable aspect of his investigations is his theoretical shift around 1930 which could be connected with the catastrophic consequences of the Great Depression.


Employment Determinants in an Input-Output Framework: Structural Decomposition Analysis and Production Technology


Athena Belegri-Roboli & Maria Markaki


The aim of this paper is to examine the impact of structural determinants on employment changes in the Greek economy, over the period 2000-2008. In this context, we apply the Structural Decomposition Analysis (SDA) in an input–output analysis framework. The SDA is a technique which breaks down a variable of interest into the changes of all the relevant determinants. In this study, we apply SDA to express employment changes (employed persons) into changes of employment’s determinants. The selected determinants are: labour productivity, Leontief’s inverse matrix and final demand. The results of this study show that labour productivity and Leontief’s inverse matrix changes produce negative effects on labour changes. In contrast, final demand changes effects are positive. Finally, labour productivity and final demand are found to be the most crucial determinants for the formation of employment, while Leontief’s inversed matrix effects are not significant.


A Note on European Citizenship, Intercultural Education and New Technologies


Kostas Theologou, Veneti Anastasia & Efrosyni-Alkist Paraskevopoulou-Kollia


This paper argues that Education could improve Citizenship. More precisely, since the use of New Technologies (NT) in Education is inevitable, the digital methods that are currently available (including Web & E-Learning projects, etc) could serve as important tools for cultivating European Citizenship.

2010 4(1)

Abstracts

Endogenous Growth Theory Twenty Years On: A Critical Assessment


Sergio Cesaratto


Endogenous growth literature emerged from dissatisfaction with one result of the neoclassical growth model: the independence of the growth rate from the saving ratio, which is seen as a variable subject to policy influence. There are at least three generations of EGT models: the old one of the sixties; the new one of the late eighties; and the most recent one, from the second half of the nineties. EGT models of any vintage fall into one of two fields: neo-Solovian (or semi-endogenous models) or fully endogenous models. Models from the sixties would generally fall into the first class and for good reasons. Indeed, most of the early generation of fully endogenous models from the late eighties fell under the ‘Jones critique’, which pointed out some of the difficulties of these models. The most recent models have found various ways to avoid those problems. It is shown that these stratagems were anticipated by Marvin Frankel in the sixties and by Lucas in the eighties. One suspects that these devices arose in order to fix the theory rather than from, say, some ex-ante empirical observation (which is often provided ex post). More importantly, this paper indicates some problems common to all vintages of EGT models, beginning with the Cambridge capital theory critique, and suggests some alternative routes for growth analysis outside neoclassical theory.


The Neoricardian Theory of Economic Integration


Guido Montani


From an economic standpoint, the globalisation process amounts to the formation of an integrated market on a world-wide scale. The aim of this paper is to show that the Ricardian theory of international trade, if correctly interpreted, can explain why an early form of global market emerged in the 19th century, and why the current process has some distinctive characteristics. To this end, the Ricardian approach will be interpreted in the light of the stages of development theory, which Ricardo was not thinking of while writing the chapter On foreign trade of the Principles, but which is an important cultural legacy of classical economic thought.


Exploitation and Productiveness: The Generalised Commodity Exploitation Theorem Once Again


Roberto Veneziani & Naoki Yoshihara


In a recent contribution on this journal, Matsuo (2009) has provided an interesting argument to refute the Generalised Commodity Exploitation Theorem (GCET), by highlighting a potential asymmetry between labour and other commodities. In this paper, a novel characterisation of the relation between exploitation and productiveness that is at the heart of the GCET is proved. This result is interesting per se, because it is weaker and more general than the standard GCET. But, owing to the rigorous specification of all the relevant conditions, it also clarifies the structure of Matsuo’s argument, and its dubious theoretical features. It is also argued that, even if Matsuo’s formal argument were deemed convincing, a revised version of the GCET can be proved, which reinstates the symmetry between labour and other commodities in the standard Leontief setting.


An Input-Output Analysis of Macroeconomic Effects of Infrastructure Investment: The Case of Attiki Odos Motorway in Greece


Athena Belegri-Roboli, Maria Markaki & Panayotis G. Michaelides


This paper estimates ex-post the macroeconomic impacts of the high-speed toll motorway investment of Attiki Odos, in the Athens Metropolitan Area in Greece. Attiki Odos is incorporated in the Trans-European Networks and it is a priority project aimed at developing the greater area of Athens and the Greek economy as a whole. The investment vector was assembled from figures calculated ex-post. The input-output model was used to estimate relative changes in output, employment and occupations by sector of economic activity. We show that the construction of the Attiki Odos grid has significantly affected the broader area.


Book Review

Money, Distribution Conflict and Capital Accumulation. Contributions to ‘Monetary Analysis’, by Eckhard Hein


Yannis Dafermos

Tractatus de ærario, by Kaspar Klock

Christos P. Baloglou


2009 3(2)

Abstracts


Peter Flaschel, Alfred Greiner & Sigrid Luchtenberg


The paper formulates for a small open economy a macrodynamic framework with an employer of ‘first’ resort, added to a competitive economic reproduction process. There is high labor mobility, with fluctuations of employment made socially acceptable through a second labor market where all remaining workers get occupation and income. We show that this economy exhibits an attracting balanced growth path, which is also viable. Moreover, pension-fund financed investment can be added to this model without disturbing this situation. We also investigate the existence of skill differentials and a corresponding educational system, which includes the equal opportunity principle.



Dimitri B. Papadimitriou


It has been shown that unemployment has far-reaching effects all leading to an inequitable distribution of well-being. On the other hand, many economists assume that unemployment tends toward a natural rate below which it cannot go without creating inflation. The paper considers a particular employment strategy of a government job creation program, such as employment guarantee scheme or employer of last resort that would satisfy the non-inflationary criteria. The paper examines the international experience of government job creation programs and pays a particular emphasis to the more successful programs instituted in Argentina and India. The conclusion drawn is that the application of an employer of last resort policy fosters economic development and in addition becomes a vehicle to meeting the Millennium Development Goals.



Shri Prakash, Shalini Sharma & Arvind Bagati


This paper has developed two hierarchical models to determine the impact of final demand for consumer durables, particularly purchases with finance, on Indian economy. Model of demand for consumer durables with or without finance is encompassed in revealed preference theory and stochastic framework Logit form of Engel consumption function is used. This is illustrated geometrically to incorporate twin threshold income levels for purchases with or without finance. This model supplements I-O model of impact of consumer durables on the economy. Concept of ‘Static Leontief Trajectory’ is formulated. Two complementary theorems, empirically supported, are its base. This paper has endogenised private final consumption expenditure in input output model. Results show that the purchase of consumer durables with or without finance considerably affects output of all sectors. Output effect varies greatly between sectors but it is maximum for the sectors final demand for the output of which is nonzero. Output effect depends, a great deal on the pattern and strength of backward, forward and residentiary linkages.



Christos P. Baloglou & Anastassios D. Karayiannis


The paper analyses the various views of ancient Greek writers about the stages of the evolution of society and shows its impact on the relevant views developed by some Romans. More than their similarities and differences is shown that the stage theory of the evolution of society has its roots to the ancient world.

2009 3(1)

Abstracts


Tadasu Matsuo


The present paper examines the validity of the Generalized Commodity Exploitation Theorem (GCET) as a criticism against the Fundamental Marxian Theorem (FMT). The FMT showed the equivalence between positive profit and positive exploitation of labor, but the GCET claims that positive profit is equivalent with exploitation of every commodity. The present study focuses on the net-production concepts, which accompany with the exploitation concepts, and shows that the sole exploitation concept, which is equivalent with positive profit combined with the ordinary physical net-production condition, is the exploitation of labor, not the exploitation of any other commodity. The exploitation of another commodity needs another net-production condition to be equivalent with positive profit. It is pseudo net-production condition, which is not purely physical condition but contains social distribution condition. This pseudo net-production concept contains inputs for the production such as fertilizer for banana trees, but it does not contain workers’ consumption goods. Thus we will confirm that the exploitation concept of any commodity other than labor is not appropriate for the economic analysis based on the ordinary net-production concept, which considers that net-products are used for human.



Dave Zachariah


The paper investigates the determinants of the average profit rate using the framework outlined by Farjoun and Machover (1983) and developed in Cottrell and Cockshott (2006). A dynamic equilibrium rate is derived that predicts the trend of the average profit rate. Long-run trends in the trajectory of capitalist economies are considered using empirical data from several countries.



Ivars Brivers


Discussions about possibilities of calculation in socialism have always been on the agenda between different economists-theorists. A deep and fundamental criticism of socialism is expounded in the voluminous work of famous Austrian economist Ludwig von Mises. As calculations in the capitalist system are based on market prices, the impossibility of calculations is not a threat in this case. But even in the capitalist system there may appear another threat – if economic indicators are expressed only in monetary terms, the measurement of goals may be questionable from the point of view of sustainable development. The idea of welfare maximization in non-monetary terms can be found in works of the only one Nobel Prize winner in Economics among the Soviet economists – Leonid Kantorovich and his disciple Ivan Siroyezhin. It is possible to set up a non-monetary objective function even at a macro level – maximization of bundles of necessities. The modern mathematical approach in economics gives a possibility to consider a set of objective functions. It may turn out that ideas of Kantorovich and Siroyezhin are still unappreciated and up-to-date from the point of view of sustainable development.



George Soklis


This paper reviews the available methods used to convert Supply and Use Tables of actual economic systems to Symmetric Input-Output Tables. It is argued that all conversion methods rest on the unrealistic assumption that single production, and not joint production, characterizes the economic structure of the real world. Finally, a straightforward treatment, based on general joint-product models inspired by von Neumann (1945) and Sraffa (1960), of the Supply and Use Tables is proposed as a way out of the inconsistencies of the conversion methods.



Emmanuel Agis & German Feldman


This paper provides a critical review of alternative orthodox and heterodox theories about the role of monetary policy in the long period and develops the Classical-Sraffian approach to the subject. Our analysis supports the view that monetary conditions influence income distribution via the relationship between the long-term interest rate, which is exogenously fixed by the Central Bank, and the ‘normal’ profit rate. Moreover, we show that inflation emerges as a consequence of distributive conflicts between workers and capitalists for the surplus product. Finally, we briefly characterize some possible transmission channels of monetary policy to the real economy, which allow establishing potential ‘bridges’ between the price system and the dynamics of quantities.

2008 2(2)

Abstracts

Marx after Sraffa and the Open Economy


Ian Steedman


I have been asked to ‘reflect’ on Marx after Sraffa (1977) after some twenty-five years. My reflection falls into three parts. In the first, certain major themes of the book are recalled and emphasized. In the second part some brief thoughts are offered on certain subsequent approaches to Marx’s value and exploitation theory, in particular the so-called ‘new solution’. The third and most substantial part turns to a major gap in Marx after Sraffa (and in many other approaches), namely the matter of international trade and how it affects Marx’s theory.


Interest, Effective Demand and Capitalist Macroeconomic Instability: A Marxian Perspective


George Argitis


This paper argues that Marx’s analysis of interest could form the basis for a monetary and institutional analysis of the effective demand, unemployment and macroeconomic instability problems in capitalist countries with conflicting intra-capitalist relationships. The analysis pinpoints the barriers set by money capitalists’ income on industry’s accumulation. A monetary-distributive mechanism is conceptualised as an endogenous source of demand deficiencies that limit the expansion of output and employment. This mechanism is essential to the construction of an approach to the Marxian monetary macroeconomic theory, which will be helpful for us to better understand some of the contradictions of contemporary capitalism.


J. M. Keynes on Entrepreneurship


Anastassios D. Karayiannis


A dynamic factor in Keynes’ economics is that of entrepreneurial investment decision-making. Although Keynes did not develop a distinct entrepreneurial theory, as the present paper demonstrates, he described important behavioural explanations regarding the entrepreneur. Also, he examined the entrepreneurial role in various forms of firms’ organization and in different economic systems.


Input Output Modelling of Labor Productivity and its Human Capital and Technology Components in Indian Economy


Shri Prakash & Brinda Balakrishnan


The study evaluates criticism of New Economic Policy (NEP) that it has led to employment-less growth and examines the role of productivity in growth and employment creation by means of the Computable General Equilibrium Input Output Model. It covers data of one-decade after the adoption of reforms policy. Empirical results synthesize productivity and employment effects of growth. The sectoral productivity is estimated from IO Tables of 1988-89, 1993-94 and 1998-99 in 1993-94 producer prices. The paper combines production function and aggregation approaches as its methodological-theoretical framework. The partial approach impounds technology and final demand turn by turn. The model results are supplemented by statistical analysis of inter-sectoral variation and inter-relations between educational development and qualifications of workforce. Results show productivity to be the pivot of growth of most sectors. The study highlights realism/unrealism of the paradigms of employment-less, employment-neutral and employment augmenting growth under NEP.


The Effect of Conservative Agenda in the United States on the Income Shares of the Highest Income Groups


William R. Dipietro & Emmanuel Anoruo


One of the most essential consequences of public policy is its potential effect on income inequality. Individuals with high incomes tend to have a conservative disposition and to adhere to a conservative philosophy. In the United States, in recent times, the conservatives have been advocating smaller government, lower taxes, and high levels of defense spending. This paper uses regression analysis on annual data to evaluate whether some of the major features of the U.S. conservative agenda favor the concentration of income in the very highest income groups in the U.S.

2008 2(1)

Abstracts

Families of Strongly Curved and of Nearly Linear Wage Curves: A Contribution to the Debate about the Surrogate Production Function


Bertram Schefold


A majority of economists had returned to the use of production functions, in spite of the Cambridge critique, while a minority continues to believe that the construction has definitively been shown to be illegitimate. The paper proposes to work towards a reconciliation between these points of view by showing that the wage curves of some families of economic systems are nearly linear so that an approximate surrogate production function seems justified, while other families of economic systems lead to strong curvatures. Random systems approach linearity.


Reproduction Prices: Equilibrium and Disequilibrium in a Classical Model


Carlo Benetti, Christian Bidard & Edith Klimovsky


We consider reproduction in the classical tradition and elaborate ‘reproduction prices models’ with a common formalization to equilibrium and disequilibrium. The accumulation of capital is the driving variable, and the capitalists’ decisions are socially evaluated by the actual rates of profit. Apart from taxes levied by Government, the non-accumulated part of production is devoted to capitalists’ consumption. Two models are distinguished depending on the hypothesis retained on capitalists’ consumption. It is shown that the rates of profit and prices are positively correlated to the relative accumulation rates. The rates of profit admit a physical interpretation: they are the accumulation rates of a ‘core economy’, obtained by isolating the production of capital by means of capital.


Indian Contribution to Leontief’s Input-Output Economics


Shalini Sharma


The study attempts a succinct review of Indian contribution to Leontief’s input-output economics. The review has been organized along the thematic lines, since review of individual contributions would have made it difficult to take a holistic view. The review highlights the enormity of Indian contribution to theory, methodology and empirical applications of input-output models to practically every branch of economic analysis. It may safely be concluded that Indian contribution to this area of economics is comparable to the American and Dutch contribution.


John Stuart Mill and Wicksell’s Cumulative Process


Dimitris P. Sotiropoulos


This article deals with the particular connection between the cumulative process in the writings of Knut Wicksell and John Stuart Mill. Although, the idea of the cumulative process is mainly attributed to Thornton, J.S. Mill was the first to emphasize that the discrepancy between the market rate of interest and the expected yield of investment were the reason why the prices generally increased during the first stages of the business cycle. Thus, he stressed the crucial role of investment, regarding the cumulative process as a disequilibrium situation, in which the net investment is positive and constantly increasing as a result of future expectations for profits. The connection between J.S. Mill’s and Wicksell’s argumentations points out that the introduction of money and credit into a barter economy in no way serves to discredit Say’s Law.


The Participation of Migrants in the Greek Economy: An Input-Output Analysis


Dimitris Keramidas, Charalambos Economidis & Nikos Stromplos


This paper presents an effort to estimate the participation of migrants in the Greek Economy with the help of the Input-Output Analysis. Several characteristics were estimated, relating mainly to the number, income, expenditure, savings and investments of migrants, along with the corresponding data for Greeks. The study reveals some aspects about the economic status of migrants in terms of consumption patterns, compared to that of Greeks, and their distance from the poverty threshold. Moreover, within the context of the Social Accounting Matrix (SAM) model, we split the household column for the year 2005 into two sub-columns, one for migrants and one for Greek households. The general conclusion of the paper is that migrants make a positive contribution to the Greek economy, mainly through their contribution to production.

2007 1(2)

Abstracts

Country Risk, Government Effectiveness, and Government Religious Regulation


William R. Dipietro


Two potential attributes of the government that may be important for the maintenance of political stability and for the degree of polyarchy within a nation are the scope of government religious regulation and the effectiveness of the government. This paper uses cross-country regression analysis to assess the effect of government religious regulation and overall government effectiveness on polyarchy and political stability, and the effect of polyarchy and political stability on country risk.


A Reformulation of Demand-Led Growth: Transformational Growth and the Consumption-Growth Relationship


Davide Gualerzi


Demand-led growth is an alternative to the dominant supply-determined approach to growth theory. The main open problem is to show in which way demand matters also in the long run. For that reason it is of particular relevance the question of the growth of demand, therefore of the rise of new markets, and its relationship to structural change. Building on the theory of Transformational Growth, the paper presents a conceptual framework that brings together autonomous investment, structural change and demand structure, therefore focusing on the Consumption-Growth relationship. In particular, the structural dynamics of market creation is the result of the effort to build the market by firms aiming at exploiting the potential implicit in the development of needs.


Formulating Non-Proportionally Growing Economies: A Generalisation of Pasinetti’s Analysis


Sobei H. Oda


This paper describes non-proportionally growing economies with changing technology and consumption demand. Specifically, this paper gives a new expression of the quantity system of nonproportionally growing economies without assuming anything about the types of technical progress or the dynamics of consumption demand, as well as some mathematical analysis and simulations as examples of its applications. The new expression can be regarded as a generalisation of Pasinetti’s formulation of non-proportionally growing economies in terms of vertically hyper-integrated sectors, because both formulations based on the same economic model while the former can analyse properly what the latter cannot express: non-labour-augmenting technical progress, seasonal change in consumption and production, traverse for changing technology and consumption demand, etc.. The new expression of non-proportionally growing economies, which pays a special attention to the time structure of production, strengthens the analytical power of the multi-sectorial production model and Pasinetti’s analysis of structural change, deepening our understanding of real economies, where technology and consumption demand never cease to change. This paper provides the following: 1. The derivation of the new expression of non-proportionally growing economies as well as its application to non-labour-augmenting technical progress and other examples mentioned above with their mathematical analysis and numerical simulations. 2. Some discussion about the time structure of production in the von-Neumann model as well as some implications of non-proportional growth to the Keynesian policies.


Relative Prices in the Classical Theory: Facts and Figures


Christian Bidard & Hans G. Ehrbar


This paper surveys, extends and illustrates recent results on the movement of relative prices of production when distribution changes.

2007 1(1)

Abstracts

The Big Picture: Britain and China and the Future of Capitalism


Paul Cockshott


This paper looks at the economic trajectory of Britain from the late 19th century to help understand how China is going to develop and what the future may hold for capitalism after globalization. Although history does not repeat exactly in different countries one can see in British history the effects that followed from the demographic transition. These same processes will come into operation in China with major effects on the evolution of global capitalism.


The Rate of Surplus Value, the Composition of Capital, and the Rate of Profit in the Chinese Manufacturing Industry: 1978-2004


Zhang Yu & Zhao Feng


This paper extends the empirical analysis of the movement of the rate of profit in the case of Chinese economy for the period 1978-2004. The rate of profit of manufacturing displays a declining tendency from the year 1978 to 1988, which precipitates in the period 1989-1998, and the tendency of the rate of profit becomes rising during the period 1999-2004. The rate of profit is viewed as the fundamental determinant of the rhythm of capital accumulation, and in the case of the Chinese economy the empirical evidence lends support to the idea that the movement of the rate of profit is consistent with the growth rate of output.


Reform, Reform the Reforms or Simply Regression? The ‘Washington Consensus’ and its Critics


Stavros D. Mavroudeas & Demophanes Papadatos


The ‘Washington Consensus’ analysis and policies are being disputed both analytically and for their effectiveness. This paper surveys first the debate on the definition of the ‘Washington Consensus’ vis-à-vis its apparent developmental shortcomings. Then it surveys the major areas where the ‘Washington Consensus’ is judged as a failure (with particular emphasis on the crises of the 1990s). In the next part it presents the main responses to the ‘crisis’ of the ‘Washington Consensus’. Its supporters are categorised in the fundamentalists and the reformists whereas its opponents are divided in the post-Washington Consensus adherents and the Marxist critics. It is argued that the Marxist perspective offers a superior understanding and critique of the ‘Washington Consensus’.


Intersectoral Linkages and Key Sectors in the Greek Economy


Eleftheria Rodousaki


This paper estimates, on the basis of traditional and modern methods, the intersectoral linkages and the key sectors in the Greek economy for the years 1988 and 1998. It finds remarkable changes in the ranking of the sectors, according to the strength of their linkages, and a downward trend in the key sectors number.


Theoretical Considerations of the Endogenous Money Hypothesis: The Turkish Experience


Constantinos Alexiou & George Anastasiadis


This paper aims at exploring the endogenous money hypothesis as this is implied by the Post Keynesian tradition. Turkey serves as the platform on which the undertaken empirical analysis is conducted. The inconclusive cointegration results obtained reflect the turbulent economic environment that Turkey has experienced over the last decades. The causal dimension however, appears to be in line with the Post Keynesian hypothesis.