Neoclassical Growth Theory and Heterodox Growth Theory: Opportunities For and Obstacles To Greater Engagement

This paper explores the possibilities for and likely impediments to greater engagement between neoclassical and heterodox growth theorists. Simple structural models are used to identify the essential “mechanics” of the growth process in both the neoclassical and heterodox traditions, and these are shown to point to important areas of theoretical overlap and even observational equivalence. It is argued, however, that the resultant opportunities for greater engagement between growth theorists are tempered by a number of obstacles, that are methodological, rhetorical and sociological in nature.Neoclassical growth theory, heterodox growth theory, endogenous growth

Hysteresis

Three competing conceptualizations of hysteresis in economics are identified: the unit/zero root approach, “true” hysteresis, and hysteresis conceived as a product of historical time. The properties of these conceptualizations are discussed and their pros and cons considered.hysteresis, path dependence, unit root, historical time

Anticipations of the Crisis: On the Similarities Between Post Keynesian Economics and Regulation Theory

The purpose of this paper is to explore the similarities between Post Keynesian Economics (PKE) and Regulation Theory (RT). It is argued that, despite important differences between these traditions, the analytical contents of PKE and RT display broad similarities with respect to their treatments of the income-generating process, the crisis-prone nature of capitalism, and the institutional contingency of capitalist growth and development. This thesis is then exemplified and substantiated with reference to the 2007—2009 financial crisis and “Great Recession”. Specifically, it is shown that important strands of both PKE and RT characterize and were successful in anticipating the crisis as the result of the exhaustion of a financialized growth process.Post Keynesian Economics, Regulation Theory, Great Recession, financial crisis

Endogenous Growth: A Kaldorian Approach

This chapter explores the Kaldorian approach to endogenous growth theory. The central principles of this approach are explored, including the claims that growth is: (a) demandled, with trade playing a central role in aggregate demand formation; and (b) pathdependent. It is shown that both the actual and natural rates of growth are path dependent in the Kaldorian tradition. The implications of inequality between the actual and natural rates of growth are investigated, and it is shown that mechanisms exist within the Kaldorian tradition that are capable of reconciling these growth rates. This results in the sustainability (in principle) of any particular equilibrium value of the actual rate of growth.endogenous growth, Kaldor, path dependence, demand-led growth, technical change, institutions, natural rate of growth

Real Sector Imbalances and the Great Recession

While much attention has been focused on the financial woes of the US economy in the wake of the Great Recession, this chapter focuses on an important real sector imbalance: the failure of real wages to keep pace with productivity growth over the past three decades. This imbalance is shown to create a structural flaw in the aggregate demand generating process that threatens to undermine future macroeconomic performance. The chapter reflects on the policy responses necessary to remedy this situation, and the likelihood that the US will succeed in avoiding a future of secular stagnation.Real wage growth, productivity growth, aggregate demand, household debt, Great Recession

The Remarkable Durability of Thirlwall’s Law

This paper contemplates the robustness of Thirlwall’s Law, a parsimonious expression that relates long run equilibrium growth in any one region to the product of world income growth and the ratio of the income elasticities of demand for exports and imports. Various extensions of the balance-of-payments-constrained growth model from which Thirlwall’s Law is derived are contemplated. In each case, Thirlwall’s Law is shown to reassert itself as a good approximation of the equilibrium growth rate. It is hypothesized that this robustness helps explain the widespread empirical success of Thirlwall’s Law.Thirlwall’s law, balance-of-payments-constrained growth, export-led growth, demand-led growth, natural rate of growth.

A Keynes-Kalecki Model of Cyclical Growth with Agent-Based Features

Throughout his career, Malcolm Sawyer has both encouraged and contributed to the development of a Kaleckian alternative to conventional macroeconomic theory. In the spirit of this endeavour, we construct a Keynes-Kalecki model of cyclical growth with agent-based features. Our model is driven by heterogeneous firms who, confronting an environment of fundamental uncertainty, revise their “state of long run expectations” in response to recent events. Model simulations generate fluctuations in the rate of growth that are aperiodic and of variable amplitude. We also study the size distribution of firms resulting from our simulations, finding evidence of a power law distribution that we have no reason to anticipate from the basic structure of our model. Finally, we reflect on the potential advantages of combining aggregate structural modelling with some of the methods and practices of agent-based computational economics.Kaleckian model, growth, cycles, agent-based computational economics

The Cost Channel of Monetary Policy in a Post Keynesian Macrodynamic Model of Inflation and Output Targeting

This paper contributes to the debate about whether or not inflation targeting is compatible with Post Keynesian economics. It does so by developing a model that takes into account the potentially inflationary consequences of interest rate manipulations. Evaluations of the macroeconomic implications of this so-called cost channel of monetary policy are common in the mainstream literature. But this literature uses supply-determined macro models and provides standard optimizing microfoundations for the various ways in which the interest rate can affect mark-ups, prices and ultimately the form of the Phillips curve. Our purpose is to study the implications of different Phillips curves, each embodying the cost channel and derived from Post Keynesian, cost-based-pricing microfoundations, in a monetary-production economy. We focus on the impact of these Phillips curves on macroeconomic stability and the consequent efficacy of inflation and output targeting. Ultimately, our results suggest that the presence of the cost channel is of less significance than the general orientation of the policy regime, and corroborate earlier finding that, in a monetary-production economy, more orthodox policy regimes are inimical to macro stabilization.Cost channel of monetary policy, incomes policy, inflation targeting, macroeconomic stability

Optimal dynamic control of invasions: applying a systematic conservation approach

The social, economic, and environmental impacts of invasive plants are well recognized. However, these variable impacts are rarely accounted for in the spatial prioritization of funding for weed management. We examine how current spatially explicit prioritization methods can be extended to identify optimal budget allocations to both eradication and control measures of invasive species to minimize the costs and likelihood of invasion. Our framework extends recent approaches to systematic prioritization of weed management to account for multiple values that are threatened by weed invasions with a multi-year dynamic prioritization approach. We apply our method to the northern portion of the Daly catchment in the Northern Territory, which has significant conservation values that are threatened by gamba grass (Andropogon gayanus), a highly invasive species recognized by the Australian government as a Weed of National Significance (WONS). We interface Marxan, a widely applied conservation planning tool, with a dynamic biophysical model of gamba grass to optimally allocate funds to eradication and control programs under two budget scenarios comparing maximizing gain (MaxGain) and minimizing loss (MinLoss) optimization approaches. The prioritizations support previous findings that a MinLoss approach is a better strategy when threats are more spatially variable than conservation values. Over a 10-year simulation period, we find that a MinLoss approach reduces future infestations by ~8% compared to MaxGain in the constrained budget scenarios and ~12% in the unlimited budget scenarios. We find that due to the extensive current invasion and rapid rate of spread, allocating the annual budget to control efforts is more efficient than funding eradication efforts when there is a constrained budget. Under a constrained budget, applying the most efficient optimization scenario (control, minloss) reduces spread by ~27% compared to no control. Conversely, if the budget is unlimited it is more efficient to fund eradication efforts and reduces spread by ~65% compared to no control

[M(CO)4(2,2′-bipyridine)] (M = Cr, Mo, W) as efficient catalysts for electrochemical reduction of CO2 to CO at a gold electrode

Group 6 complexes of the type [M(CO)4(bpy)] (M=Cr, Mo, W) are capable of behaving as electrochemical catalysts for the reduction of CO2 at potentials less negative than those for the reduction of the radical anions [M(CO)4(bpy)].−. Cyclic voltammetric, chronoamperometric and UV/Vis/IR spectro-electrochemical data reveal that five-coordinate [M(CO)3(bpy)]2− are the active catalysts. The catalytic conversion is significantly more efficient in N-methyl-2-pyrrolidone (NMP) compared to tetrahydrofuran, which may reflect easier CO dissociation from 1e−-reduced [M(CO)4(bpy)].− in the former solvent, followed by second electron transfer. The catalytic cycle may also involve [M(CO)4(H-bpy)]− formed by protonation of [M(CO)3(bpy)]2−, especially in NMP. The strongly enhanced catalysis using an Au working electrode is remarkable, suggesting that surface interactions may play an important role, too