The middle class in macroeconomics and growth theory: a three-class neo-Kaleckian-Goodwin model

This paper presents a three class growth model with labor market conflict. The classes are workers, a middle management middle class, and a "top" management capitalist class. The model introduces personal income distribution that supplements conventional concerns with functional income distribution. Within such a model, endogenously generated changes in personal income distribution can generate endogenous shifts from profit-led to wage-led regimes and vice-versa. A model of an economy with three classes enables us to consider richer patterns of class conflict because the middle class has shared interests and conflicts with both capitalists and workers. Changes that benefit the middle class do not necessarily increase growth or employment or benefit workers

Backward bending structure of Phillips Curve in Japan, France, Turkey and the U.S.A.

This work aims to analyse the cointegration and the causality relationship between inflation and unemployment by using nonlinear A.R.D.L. and two popular nonlinear causality tests for the period from 1960 to 2016 in Japan, Turkey, the U.S.A. and from 1970 to 2016 in France. This study complements the previous empirical papers. However, it differs from the existing literature with simultaneous use of nonlinear A.R.D.L. and causality methods. Nonlinear A.R.D.L. determined that there is a long run relationship between inflation and unemployment; between economic growth and unemployment for Japan, France, the U.S.A. and Turkey

The Critics of Modern Money Theory (MMT) are Right

Eric Tymoigne and Randall Wray's (T&W, 2013) defense of MMT leaves the MMT emperor even more naked than before (excuse the Yogi Berra-ism). The criticism of MMT is not that it has produced nothing new. The criticism is that MMT is a mix of old and new, the old is correct and well understood, while the new is substantially wrong. Among many failings, T&W fail to provide an explanation of how MMT generates full employment with price stability; lack a credible theory of inflation; and fail to justify the claim that the natural rate of interest is zero. MMT currently has appeal because it is a policy polemic for depressed times. That makes for good politics but, unfortunately, MMT's policy claims are based on unsubstantiated economics

Financial Transaction Tax: Small is Beautiful

The case for taxing financial transactions merely to raise more revenues from the financial sector is not particularly strong. Better alternatives to tax the financial sector are likely to be available. However, a tax on financial transactions could be justified in order to limit socially undesirable transactions when more direct means of doing so are unavailable for political or practical reasons. Some financial transactions are indeed likely to do more harm than good, especially when they contribute to the systemic risk of the financial system. However, such a financial transaction tax should be very small, much smaller than the negative externalities in question, because it is a blunt instrument that also drives out socially useful transactions. There is a case for taxing over-the-counter derivative transactions at a somewhat higher rate than exchange-based derivative transactions. More targeted remedies to drive out socially undesirable transactions should be sought in parallel, which would allow, after their implementation, to reduce or even phase out financialtransaction taxes

The Rise and Fall of Export-Led Growth

This paper traces the rise of export-led growth as a development paradigm and argues that it is exhausted owing to changed conditions in emerging market (EM) and developed economies. The global economy needs a recalibration that facilitates a new paradigm of domestic demand-led growth. Globalization has so diversified global economic activity that no country or region can act as the lone locomotive of global growth. Political reasoning suggests that EM countries are not likely to abandon export-led growth, nor will the international community implement the international arrangements needed for successful domestic demand-led growth. Consequently, the global economy likely faces asymmetric stagnation