Engelbert Stockhammer | King's College London (original) (raw)
Papers by Engelbert Stockhammer
Der Fordismus, das Akkumulationsregime der Nachkriegszeit, das auf einem impliziten Kompromiss zw... more Der Fordismus, das Akkumulationsregime der Nachkriegszeit, das auf einem impliziten Kompromiss zwischen Kapital und Arbeit basierte, war durch einen regulierten Finanzsektor und durch niedrige reale Zinsen gekennzeichnet war, kam in den 70er Jahren in die Krise. Mit der Neo-Konservativen Revolution der frühen achtziger Jahre verschoben sich die Kapital-Arbeits-Beziehungen zugunsten des Kapitals, ausgedrückt in einer steigenden Profitquote. Der Wohlfahrtsstaat wurde zurückgebaut und der finanzielle Sektor dereguliert und realen Zinssätze stiegen. Gleichzeitig fielen Wachstumsraten und Akkumulationsrate, und Arbeitslosigkeit erhöhte sich auf Niveaus, die in der Nachkriegsgeschichte beispiellos waren. Die Keynesianische Erklärung, die in diesem Artikel vorgeschlagen wird sieht im Rückgang der Kapitalbildung die Hauptursache für den Anstieg der Arbeitslosigkeit. Der Grund für Verlangsamung in der Akkumulation ist in den Änderungen im Finanzsektor suchen. Nicht nur haben Realzinssätze di...
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Globalization and the effects of changes in functional income distribution on aggregate demand in... more Globalization and the effects of changes in functional income distribution on aggregate demand in Germany Working Paper
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Review of Evolutionary Political Economy, 2020
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Wage-Led Growth
In the last quarter century dramatic changes in income distribution have taken place. This refers... more In the last quarter century dramatic changes in income distribution have taken place. This refers to the personal distribution of income as well as to the functional distribution of income. Distribution has become more polarized in most OECD countries (OECD 2008, 2011), with the very top income groups increasing their income shares substantially in the Anglo-Saxon countries, in particular in the United States (Atkinson et al. 2011). Wage shares have fallen in virtually all OECD countries, with decreases typically being more pronounced in continental European countries (and Japan) than in the Anglo-Saxon countries. In the advanced economies1 the (adjusted) wage share has, on average, fallen from 73.4 in 1980 to 64.0 per cent in 2007 (Figure 2.1). The data for Germany are very similar (72.2 to 61.8); the decline is somewhat stronger in Japan (77.2 to 62.2) and a little weaker in the United States (70.0 to 64.9). Overall, real wage growth has clearly lagged behind productivity growth since around 1980. This constitutes a major historical change as wage shares had been stable or increasing in the post-war era.
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Macroeconomic Theory and Macroeconomic Pedagogy, 2009
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Industrial and Corporate Change
While flexible exchange rates are commonly regarded as shock absorbers, heterodox views suggest t... more While flexible exchange rates are commonly regarded as shock absorbers, heterodox views suggest that they can play a pro-cyclical role in emerging markets. This article provides theoretical and empirical support for this view. Drawing on post-Keynesian and structuralist theories, we propose a simple model in which flexible exchange rates in conjunction with external shocks become endogenous drivers of boom-bust cycles, once financial effects from foreign-currency debt are accounted for. We present empirical evidence for regular cycles in nominal US-dollar exchange rates in several emerging markets that are closely aligned with cycles in economic activity. An econometric analysis suggests the presence of a cyclical interaction mechanism between exchange rates and output, in line with the theoretical model, in Chile, South Africa, and partly the Philippines. Further evidence indicates that such exchange rate cycles cannot exclusively be attributed to external factors, such as commodit...
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Review of Keynesian Economics
Since the global financial crisis there has been growing interest in Post-Keynesian macroeconomic... more Since the global financial crisis there has been growing interest in Post-Keynesian macroeconomic theory by political economists. In particular, the recent Growth Models approach in Comparative Political Economy (CPE) draws heavily on Kaleckian macroeconomics of demand regimes. This paper, firstly, traces the disintegration of nineteenth-century political economy and highlights that many streams within heterodox economics are a continuation of the political economy project, as are the sub-fields of CPE and International Political Economy in the social sciences. Secondly, the paper gives an overview of the Growth Models approach and its relation to Post-Keynesian Economics (PKE). It clarifies different strategies of identifying growth models empirically, namely GDP growth decomposition versus analysing growth drivers, and it highlights changes in growth models since the global financial crisis. Finally, it identifies opportunities and challenges that emerge from a continued engagemen...
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This paper may be downloaded free of charge from www.postkeynesian.net
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Rethinking Economics, 2017
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Cambridge Journal of Economics, 2016
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The Rise of Unemployment in Europe
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Cambridge Journal of Economics, 2011
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The finance-dominated accumulation regime, income distribution and the
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Cambridge Journal of Economics, Nov 12, 2020
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An increase in the wage share has contradictory effects on the subaggregates of aggregate demand.... more An increase in the wage share has contradictory effects on the subaggregates of aggregate demand. Private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes. Investment expenditures ought to be negatively affected because investment will positively depend on profits. Net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labor costs and thus a loss in competitiveness. Theoretically aggregate demand can therefore be either wage led or profit led depending on how these effects add up. The results will crucially depend on how open the economy is internationally. The paper estimates a Post-Kaleckian macro model incorporating these effects for the Euro area and finds that the Euro area is presently in a wage-led demand regime. Implications for wage policies are discussed.
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The recent integration of post-Keynesian insights into Comparative Political Economy is an exciti... more The recent integration of post-Keynesian insights into Comparative Political Economy is an exciting development. Post-Keynesian theory differs from neoclassical and Marxist theories in its analysis of the role of income distribution and of finance. It allows for wage-led demand regimes and it regards finance to be endogenously created and a source of instability. The paper contributes to the debate on the integration of demand regimes in the Varieties of Capitalism analyses. It contrasts post-Keynesian theory to the New Keynesian three equation model. It highlights that post-Keynesian theory gives prominence to the role of income distribution and allows for wage-led demand regimes; financial variables play a key role, which gives rise to endogenous instability and financial cycles (Minskyan debt cycles); economic growth is regarded as a path dependent process (with unemployment hysteresis due to wage norms) and is not anchored in a supply side equilibrium. However, PKE has so far mo...
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Die Entwicklung hin zur Finanzkrise von 2007 ging in der Mehrzahl der industrialisierten Lander m... more Die Entwicklung hin zur Finanzkrise von 2007 ging in der Mehrzahl der industrialisierten Lander mit drei Trends einher: Einer zunehmend ungleichen Verteilung der Einkommen, sowohl im personellen wie auch im funktionellen Sinne, einem starken Anstieg der Haushaltsverschuldung und eng damit verbunden weit uber der Inflationsrate steigende Immobilienpreise. Der vorliegende Artikel geht der Frage nach wie sich diese Entwicklungen auf das Wirtschaftswachstum im Zeitraum 1980 bis 2013 ausgewirkt haben. Die Untersuchung basiert dabei auf einem Panel-Datensatz der 18 OECD Mitgliedslander umfasst und mit dem eine Konsum-, Investitions-, Export und Importfunktion geschatzt werden. Es zeigt sich, dass qualitativ fur die Gruppe der untersuchten OECD Lander ein lohngetriebenes Nachfragesystem vorliegt und somit eine fallende Lohnquote negative Auswirkungen auf die aggregierte Nachfrage hat. Eine genauere Untersuchung der Effektgrosen kommt jedoch zum Schluss, dass in der Periode 1997-2007, weder...
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The paper investigates the relation between effective demand, income distribution and unemploymen... more The paper investigates the relation between effective demand, income distribution and unemployment empirically. Its aim is to evaluate Keynesian, Kaldorian and neoclassical hypotheses about the determination of labor market variables. To do so, a vector autoregression model consisting of capital accumulation, capacity utilization, the profit share, unemployment and the growth of labor productivity is estimated. A general post-Keynesian model following the lines of Kalecki and Kaldor is presented and provides the specification for a structural VAR. The model is estimated for the USA, UK and France.
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We use an unobserved components model to estimate hysteresis effects in the EU15. This includes t... more We use an unobserved components model to estimate hysteresis effects in the EU15. This includes the first estimates of their kind for Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg, the Netherlands, Portugal, and Spain, and therefore constitutes a significant addition to the literature. Importantly, we use a similar dataset and estimation strategy to those used by the European Commission to estimate its NAIRU series. The European Commission NAIRUs show sharp increases for many countries over the past decade, often in the absence of major changes to labour market institutions. A simple explanation, supported by our results, is the existence of unemployment hysteresis, which has important policy implications for the EU.
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Der Fordismus, das Akkumulationsregime der Nachkriegszeit, das auf einem impliziten Kompromiss zw... more Der Fordismus, das Akkumulationsregime der Nachkriegszeit, das auf einem impliziten Kompromiss zwischen Kapital und Arbeit basierte, war durch einen regulierten Finanzsektor und durch niedrige reale Zinsen gekennzeichnet war, kam in den 70er Jahren in die Krise. Mit der Neo-Konservativen Revolution der frühen achtziger Jahre verschoben sich die Kapital-Arbeits-Beziehungen zugunsten des Kapitals, ausgedrückt in einer steigenden Profitquote. Der Wohlfahrtsstaat wurde zurückgebaut und der finanzielle Sektor dereguliert und realen Zinssätze stiegen. Gleichzeitig fielen Wachstumsraten und Akkumulationsrate, und Arbeitslosigkeit erhöhte sich auf Niveaus, die in der Nachkriegsgeschichte beispiellos waren. Die Keynesianische Erklärung, die in diesem Artikel vorgeschlagen wird sieht im Rückgang der Kapitalbildung die Hauptursache für den Anstieg der Arbeitslosigkeit. Der Grund für Verlangsamung in der Akkumulation ist in den Änderungen im Finanzsektor suchen. Nicht nur haben Realzinssätze di...
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Globalization and the effects of changes in functional income distribution on aggregate demand in... more Globalization and the effects of changes in functional income distribution on aggregate demand in Germany Working Paper
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Review of Evolutionary Political Economy, 2020
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Wage-Led Growth
In the last quarter century dramatic changes in income distribution have taken place. This refers... more In the last quarter century dramatic changes in income distribution have taken place. This refers to the personal distribution of income as well as to the functional distribution of income. Distribution has become more polarized in most OECD countries (OECD 2008, 2011), with the very top income groups increasing their income shares substantially in the Anglo-Saxon countries, in particular in the United States (Atkinson et al. 2011). Wage shares have fallen in virtually all OECD countries, with decreases typically being more pronounced in continental European countries (and Japan) than in the Anglo-Saxon countries. In the advanced economies1 the (adjusted) wage share has, on average, fallen from 73.4 in 1980 to 64.0 per cent in 2007 (Figure 2.1). The data for Germany are very similar (72.2 to 61.8); the decline is somewhat stronger in Japan (77.2 to 62.2) and a little weaker in the United States (70.0 to 64.9). Overall, real wage growth has clearly lagged behind productivity growth since around 1980. This constitutes a major historical change as wage shares had been stable or increasing in the post-war era.
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Macroeconomic Theory and Macroeconomic Pedagogy, 2009
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Industrial and Corporate Change
While flexible exchange rates are commonly regarded as shock absorbers, heterodox views suggest t... more While flexible exchange rates are commonly regarded as shock absorbers, heterodox views suggest that they can play a pro-cyclical role in emerging markets. This article provides theoretical and empirical support for this view. Drawing on post-Keynesian and structuralist theories, we propose a simple model in which flexible exchange rates in conjunction with external shocks become endogenous drivers of boom-bust cycles, once financial effects from foreign-currency debt are accounted for. We present empirical evidence for regular cycles in nominal US-dollar exchange rates in several emerging markets that are closely aligned with cycles in economic activity. An econometric analysis suggests the presence of a cyclical interaction mechanism between exchange rates and output, in line with the theoretical model, in Chile, South Africa, and partly the Philippines. Further evidence indicates that such exchange rate cycles cannot exclusively be attributed to external factors, such as commodit...
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Review of Keynesian Economics
Since the global financial crisis there has been growing interest in Post-Keynesian macroeconomic... more Since the global financial crisis there has been growing interest in Post-Keynesian macroeconomic theory by political economists. In particular, the recent Growth Models approach in Comparative Political Economy (CPE) draws heavily on Kaleckian macroeconomics of demand regimes. This paper, firstly, traces the disintegration of nineteenth-century political economy and highlights that many streams within heterodox economics are a continuation of the political economy project, as are the sub-fields of CPE and International Political Economy in the social sciences. Secondly, the paper gives an overview of the Growth Models approach and its relation to Post-Keynesian Economics (PKE). It clarifies different strategies of identifying growth models empirically, namely GDP growth decomposition versus analysing growth drivers, and it highlights changes in growth models since the global financial crisis. Finally, it identifies opportunities and challenges that emerge from a continued engagemen...
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This paper may be downloaded free of charge from www.postkeynesian.net
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Rethinking Economics, 2017
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Cambridge Journal of Economics, 2016
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The Rise of Unemployment in Europe
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Cambridge Journal of Economics, 2011
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The finance-dominated accumulation regime, income distribution and the
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Cambridge Journal of Economics, Nov 12, 2020
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An increase in the wage share has contradictory effects on the subaggregates of aggregate demand.... more An increase in the wage share has contradictory effects on the subaggregates of aggregate demand. Private consumption expenditures ought to increase because wage incomes typically are associated with higher consumption propensities than capital incomes. Investment expenditures ought to be negatively affected because investment will positively depend on profits. Net exports will be negatively affected because an increase in the wage share corresponds to an increase in unit labor costs and thus a loss in competitiveness. Theoretically aggregate demand can therefore be either wage led or profit led depending on how these effects add up. The results will crucially depend on how open the economy is internationally. The paper estimates a Post-Kaleckian macro model incorporating these effects for the Euro area and finds that the Euro area is presently in a wage-led demand regime. Implications for wage policies are discussed.
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The recent integration of post-Keynesian insights into Comparative Political Economy is an exciti... more The recent integration of post-Keynesian insights into Comparative Political Economy is an exciting development. Post-Keynesian theory differs from neoclassical and Marxist theories in its analysis of the role of income distribution and of finance. It allows for wage-led demand regimes and it regards finance to be endogenously created and a source of instability. The paper contributes to the debate on the integration of demand regimes in the Varieties of Capitalism analyses. It contrasts post-Keynesian theory to the New Keynesian three equation model. It highlights that post-Keynesian theory gives prominence to the role of income distribution and allows for wage-led demand regimes; financial variables play a key role, which gives rise to endogenous instability and financial cycles (Minskyan debt cycles); economic growth is regarded as a path dependent process (with unemployment hysteresis due to wage norms) and is not anchored in a supply side equilibrium. However, PKE has so far mo...
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Die Entwicklung hin zur Finanzkrise von 2007 ging in der Mehrzahl der industrialisierten Lander m... more Die Entwicklung hin zur Finanzkrise von 2007 ging in der Mehrzahl der industrialisierten Lander mit drei Trends einher: Einer zunehmend ungleichen Verteilung der Einkommen, sowohl im personellen wie auch im funktionellen Sinne, einem starken Anstieg der Haushaltsverschuldung und eng damit verbunden weit uber der Inflationsrate steigende Immobilienpreise. Der vorliegende Artikel geht der Frage nach wie sich diese Entwicklungen auf das Wirtschaftswachstum im Zeitraum 1980 bis 2013 ausgewirkt haben. Die Untersuchung basiert dabei auf einem Panel-Datensatz der 18 OECD Mitgliedslander umfasst und mit dem eine Konsum-, Investitions-, Export und Importfunktion geschatzt werden. Es zeigt sich, dass qualitativ fur die Gruppe der untersuchten OECD Lander ein lohngetriebenes Nachfragesystem vorliegt und somit eine fallende Lohnquote negative Auswirkungen auf die aggregierte Nachfrage hat. Eine genauere Untersuchung der Effektgrosen kommt jedoch zum Schluss, dass in der Periode 1997-2007, weder...
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The paper investigates the relation between effective demand, income distribution and unemploymen... more The paper investigates the relation between effective demand, income distribution and unemployment empirically. Its aim is to evaluate Keynesian, Kaldorian and neoclassical hypotheses about the determination of labor market variables. To do so, a vector autoregression model consisting of capital accumulation, capacity utilization, the profit share, unemployment and the growth of labor productivity is estimated. A general post-Keynesian model following the lines of Kalecki and Kaldor is presented and provides the specification for a structural VAR. The model is estimated for the USA, UK and France.
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We use an unobserved components model to estimate hysteresis effects in the EU15. This includes t... more We use an unobserved components model to estimate hysteresis effects in the EU15. This includes the first estimates of their kind for Austria, Belgium, Denmark, Finland, Greece, Ireland, Luxembourg, the Netherlands, Portugal, and Spain, and therefore constitutes a significant addition to the literature. Importantly, we use a similar dataset and estimation strategy to those used by the European Commission to estimate its NAIRU series. The European Commission NAIRUs show sharp increases for many countries over the past decade, often in the absence of major changes to labour market institutions. A simple explanation, supported by our results, is the existence of unemployment hysteresis, which has important policy implications for the EU.
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CIEF Working Paper, No. 14-17, Aug 2014
Several Nobel laureates economists have called for redistributive policies. This paper shows that... more Several Nobel laureates economists have called for redistributive policies. This paper shows that there is a strong case for redistributive policies because the global increase of income inequality and wealth concentration was an important driver for the financial and Eurozone crisis. The high levels of income inequality resulted in balance of payment imbalances and rising debt levels. Rising wealth concentration contributed to the crisis because the increasing asset demand from the rich played a key role in the rise of the structured credit market and enabled poor and middle-income households to accumulate increasing amounts of debt. To tame the inherent instability of the current mode of capitalism it is necessary to reduce inequality.
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This paper analyses the emergence of current account imbalances as a result of the coexistence of... more This paper analyses the emergence of current account imbalances as a result of the coexistence of trade flows and financial flows. The literature has tended to view these factors in isolation: Many post-Kaleckian models, as well as Net-saving approaches assume that financial flows will adjust to trade flows. Models focusing on financial crises feature a strong role for financial flows but ignore drivers of trade flows. Similarly, empirical analyses either ignore drivers of financial flows or insufficiently capture determinants of trade flows. The paper, first, proposes a simple macroeconomic framework of the current account which gives equal emphasis to trade flows, determined by price competitiveness, and financial flows, determined by asset prices. Second, we test a reduced form of the model for 28 OECD countries for the period 1971-2014. Our results indicate that cost competitiveness as well as asset prices play a role in the determination of current accounts, but asset prices have dominated in the last two decades
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