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321. Industrial Structure and Party Competition in an Age of Hunger Games: Donald Trump and the 2016 Presidential Election

Author:
Thomas Ferguson, Paul Jorgensen, and Jie Chen
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The U.S. presidential election of 2016 featured frontal challenges to the political establishments of both parties and perhaps the most shocking election upset in American history. This paper analyzes patterns of industrial structure and party competition in both the major party primaries and the general election. It attempts to identify the genuinely new, historically specific factors that led to the upheavals, especially the steady growth of a “dual economy” that locks more and more Americans out of the middle class and into a life of unsteady, low wage employment and, all too often, steep debts. The paper draws extensively on a newly assembled, more comprehensive database of political contributions to identify the specific political forces that coalesced around each candidate. It considers in detail how different investor blocs related to the Republican Party and the Trump campaign as the campaign progressed and the role small contributors played in the various campaigns, especially that of Vermont Senator Bernie Sanders. It also critically evaluates claims about the final weeks of the election in the light of important overlooked evidence.
Topic:
Economics, Political Economy, Elections, Finance, Donald Trump, Political Parties, and Banking
Political Geography:
North America, Global Focus, and United States of America

322. Inequality in the 21st century: A critical analysis of Piketty’s work

Author:
Nadia Garbellini
Publication Date:
01-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Thomas Piketty’s (2014) Capital in the XXI Century aims to analyze distributions of income and wealth and their determinants, in a set of developed countries from the nineteenth century to the present. The objective is a bold one, made even more so by the fact that Piketty pursues it not only from a theoretical, but also, from an empirical point of view. The task is particularly impressive not only because of the enormous effort required in collecting and organising data, but also because the work entails attaching a deterministic interpretation to facts and figures from radically different countries over a time span that covers almost two centuries, thereby forcing comparison between numbers coming from clearly incommensurable contexts. These difficulties are not lost to Piketty, who states that “[w]ithout precisely defined sources, methods, and concepts, it is possible to see everything and its opposite.” (Piketty, 2014, pp.2-3) This study argues that the empirical ‘methods and concepts’ adopted by Piketty are not always consistent with those coming from his reference theoretical framework, nor from National Accounts (United Nations, 2009).
Topic:
Economics, Inequality, Income Inequality, Economic Growth, and Capital
Political Geography:
Global Focus

323. Persistent Effects of Autonomous Demand Expansions

Author:
Daniele Girardi, Walter Paternesi Meloni, and Antonella Stirati
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
The prevailing wisdom that aggregate demand shocks determine short-run cyclical fluctuations around a supply-determined equilibrium growth rate and an associated equilibrium unemployment rate (or NAIRU) has been called into question by various strands of literature over the last few decades. Specifically, a recently revived literature on hysteresis finds significant persistence in the effects of negative aggregate demand shocks (e.g. Blanchard et al. 2015; Fatás and Summers 2016; Martin et al. 2015). This paper aims to assess this tendency to return to a supply-determined potential output, independent of aggregate demand, after episodes of demand expansion. In line with the hysteresis literature, we assess the persistence of aggregate demand effects on key macroeconomic outcomes. However, in contrast with much of that literature, we assess whether persistence is detected also in instances of demand expansion. We study 94 episodes of demand expansion in 34 OECD countries between 1960 and 2015. We look at the sum of primary public expenditure and exports, a variable we call 'autonomous demand'. We define an expansion as a large yearly percentage increase in autonomous demand, ‘large’ meaning greater than a standard deviation above the country mean. We analyze the impact of these expansions on key macroeconomic outcomes in the subsequent decade, using various techniques to deal with endogeneity. We employ two main approaches: a dynamic two-way fixed-effects model, analogous to a standard difference-in-differences estimation; and a propensity score-based specification which explicitly models selection bias. We find a highly significant persistent effect on the GDP level: a one-off expansion in our autonomous demand variable by (an average of) 5% is associated 10 years later with a GDP level around 3% higher than in the control group, with no sign of mean reversion. We also document strong persistent effects on capital stock, employment and participation rates. Effects on productivity and the unemployment rate are also strong and quite persistent, but evidence regarding their permanence is more mixed. We do not find that expansions, on average, cause high or accelerating inflation. Our results lead us to ask whether hysteresis should be considered a distortion in the working of market economies that holds only in specific circumstances – as the mainstream literature has generally suggested – or whether it is, in fact, a pervasive phenomenon which holds most of the time.
Topic:
Economics, Inflation, Unemployment, and Capital Formation
Political Geography:
Global Focus

324. The Focus of Academic Economics: Before and After the Crisis

Author:
Ernest Aigner, Matthias Aistleitner, Florentin Glötzl, and Jakob Kapeller
Publication Date:
05-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Has the global financial crisis of 2007ff had a visible impact on the economics profession? To answer this question we employ a bibliometric approach and compare the content and orientation of economic literature before and after the crisis with reference to two different samples: A large-scale sample consisting of more than 440,000 articles published between 1956 and 2016 and a smaller sample of 400 top-cited papers before and after the crisis. Our results suggest that – unlike the Great Depression of the 1930s – the current financial crisis did not lead to any major theoretical or methodological changes in contemporary economics, although the topic of financial instability received increased attention after the crisis.
Topic:
Economics, Academia, and Economic Crisis
Political Geography:
Global Focus

325. Citation Patterns in Economics and Beyond

Author:
Matthias Aistleitner, Jakob Kapeller, and Stefan Steinerberger
Publication Date:
11-2018
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper we comparatively explore three claims concerning the disciplinary character of economics by means of citation analysis. The three claims under study are: (1) economics exhibits strong forms of institutional stratification and, as a byproduct, a rather pronounced internal hierarchy, (2) economists strongly conform to institutional incentives and (3) modern mainstream economics is a largely selfreferential intellectual project mostly inaccessible to disciplinary or paradigmatic outsiders. The validity of these claims is assessed by means of an interdisciplinary comparison of citation patterns aiming to identify peculiar characteristics of economic discourse. In doing so, we emphasize that citation data can always be interpreted in different ways, thereby focusing on the contrast between a ‘cognitive’ and an ‘evaluative’ approach towards citation data.
Topic:
Economics, Sociology, Academia, Citation, and Hierarchy
Political Geography:
Global Focus

326. CONFLICT RESEARCHERS SHOULD CARE ABOUT THE POLITICAL ECONOMY OF DATA PRODUCTION

Author:
Andrew Kerner and Charles Crabtree
Publication Date:
03-2018
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
Conflict scholars, policy professionals, and non-profit organizations routinely link the outbreak of violence to economics and, particularly, to economic growth. Some scholars have linked growth conditions to the outbreak of violence while others have linked violence to subsequent growth trajectories. The relationship between violence and economics—and the related debate about whether violence is better considered a consequence of “politics” or “economics”—is central to the study of violence, and therefore central to the type of recommendations researchers provide to policymakers and the INGO community. The important questions in this area of inquiry are often empirical, and resolving them requires accurate and unbiased data. We are used to scrutinizing our measures of violence, but typically take for granted that economic data are apolitically generated. We know that these data must be measured with some degree of error but we typically assume that those errors are random, or, at least, unrelated to the conflict-related processes we use them to understand. That’s a lot to take on faith. If these data are not apolitically generated, any observed relationship between the economy and violence might in fact capture a relationship between the politics of violence and the politics of economic measurement.
Topic:
Development, Economics, Political Economy, World Bank, Conflict, and Data Production
Political Geography:
Global Focus

327. CAN ECONOMIC SANCTION ACTIVITY IMPROVE HUMAN RIGHTS PRACTICES?

Author:
K. Chad Clay
Publication Date:
04-2018
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
Governments often use economic sanctions for the expressed reason of curbing poor human rights practices by targeted states. However, previous research on the topic (e.g. Peksen 2009; Wood 2008) has found that the imposition of economic sanctions is regularly followed by increases in the use of torture, extrajudicial killing, political imprisonment, and enforced disappearance (also known as physical integrity rights abuses) by the targeted government, even when the sanctions are imposed over the target’s human rights practices. This raises a question: if sanctions produce worse human rights outcomes in the states targeted with them, why do governments continue to use them to try to improve human rights? There are many possible answers to that question, but in my recent article at the Journal of Global Security Studies, I focus on two in particular. First, while the imposition of economic sanctions may very well lead to increased abuse in targeted states, the threat of human rights-related economic sanctions may lead to improvements in the targeted government’s human rights practices (e.g. Drezner 2003; Lacy and Niou 2004). Second, targeted states may not be the only, or even the most important, audience for the signal sent by sanction activity (Baldwin 1985). As such, by showing observing leaders around the world that there is a possible additional cost associated with human rights abuse, rights-related sanction activity may cause some governments that were not targeted with sanctions to think twice before engaging in rights violations.
Topic:
Economics, Human Rights, and Sanctions
Political Geography:
China, Burundi, and Global Focus

328. National Minorities and Socioeconomic Equality: Still Work in Progress

Author:
Andreea Carstocea
Publication Date:
12-2018
Content Type:
Policy Brief
Institution:
European Centre for Minority Issues (ECMI)
Abstract:
National minorities often find themselves at a socio-economic disadvantage, whether in their access to employment, adequate housing, social services or healthcare. The Council of Europe Framework Convention for the Protection of National Minorities, the main legal instrument safeguarding the rights of national minorities, includes the right to equality before the law and of equal protection by the law, and the right to effective participation in social and economic life. This Issue brief will focus on the monitoring process of this legal instrument, analysing the extent to which the right to socioeconomic participation is monitored by the Advisory Committee of the Framework Convention for the Protection of National Minorities. The conclusion of the Issue brief will point towards a rather inconsistent and unstructured approach towards the monitoring of this topic and will argue that the socio-economic objectives already developed under the Framework Convention should be followed through in the monitoring of the socio-economic situation of all national minorities, alongside renewed requests for improved data collection by governments.
Topic:
Economics, Government, Nationalism, Minorities, Ethnicity, Socioeconomics, and Protected People
Political Geography:
Global Focus

329. The drivers of household indebtedness re-considered: an empirical evaluation of competing macroeconomic arguments on the determinants of household indebtedness in OECD countries

Author:
Glenn Lauren Moore and Engelbert Stockhammer
Publication Date:
02-2018
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
Household debt is at a record high in most OECD countries and it played a crucial role in the recent financial crisis. Several arguments on the macroeconomic drivers of household debt have been put forward, and most have been empirically tested, albeit in isolation of each other. This paper empirically tests seven competing hypotheses on the macroeconomic determinants of household indebtedness together in one econometric study. Existing arguments suggest that residential house prices, upward movements in the prices of assets demanded by households, the income share of the top 1%, falling wages, the rolling back of the welfare state, the age structure of the population and the short-term interest rate drive household indebtedness. We formulate these arguments as hypotheses and test them for a panel of 13 OECD countries over the period 1993 - 2011 using error correction models. We also investigate whether effects differ in boom and bust phases of the debt and house price cycles. The results show that the most robust macroeconomic determinant of household debt is real residential house prices, and that the phase of the debt and house price cycles plays a role in household debt accumulation.
Topic:
Debt, Economics, Macroeconomics, Economic Cooperation, and Housing
Political Geography:
Global Focus

330. Energy in Economic Growth: Is Faster Growth Greener?

Author:
Gregor Semieniuk
Publication Date:
04-2018
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
An influential theoretical hypothesis holds that if aggregate productivity growth accelerates, then so does the decline in energy intensity. Whether faster growth is greener in this sense is crucial for modeling future growth and climate change mitigation, but empirical evidence is lacking. This paper characterizes the global, long-run historical relationship between changes in energy intensity and labor pro- ductivity growth rates. Basing estimates on an unbalanced panel of 180 countries for the period 1950-2014 and the world as a whole, it captures a significantly larger historical window than previous studies. The paper finds a stylized fact whereby the rate at which energy intensity changes is constant or even increases as labor productivity accelerates. Faster growth is not greener. This provides important new information for calibrating integrated assessment models, many of which make a green growth assumption in near term projections.
Topic:
Economics, Energy Policy, Economic Growth, Green Technology, and Renewable Energy
Political Geography:
Global Focus