Digital Commons Network^™

Privatization And The Postsocialist Fertility Decline, Gabor Scheiring, Bryant P. H. Hui, Darja Irdam, Aytalina Azarova, Eva Fodor, Gosta Esping-Andersen, Lawrence King, David Stuckler

PERI Working Papers

In this article, we analyze the privatization of companies as a potential but so far neglected factor behind the postsocialist fertility decline. We test this hypothesis using a novel database comprising information on the demographic and enterprise trajectories of 52 Hungarian towns between 1989-2006 and a cross-country dataset of 28 countries in Eastern Europe. We fit fixed and random-effects models adjusting for potential confounding factors and control for time-variant factors and common trends. We find that privatization is significantly associated with fertility decline, explaining approximately half of the overall fertility decline across the 52 towns and the 28 countries.

South Asian Economies In Two Imperialist Regimes Between 1950 And 2020, Vamsi Vakulabharanam

PERI Working Papers

This chapter discusses the evolution of post-colonial South Asian economies using the triad of dominant classes, state and imperialism. Two key insights help us make sense of this evolution. First, the dominant classes such as landed interests, private capital and government bureaucrats in South Asia were able to prevent a radical/progressive restructuring of the economies from the very outset. Any deep crisis that threatened to radically transform the existing social order was solved through an ‘imperialist fix’, whereby the dominant classes in conjunction with the state sought external help (e.g. ‘Green Revolution’ in the wake of food crises of 1960s). …

Should Economists Deceive? Prosocial Lying, Paternalism, And The ‘Ben Bernanke Problem’, George Demartino

PERI Working Papers

A widely held principle in professional ethics, across the professions, is the duty to speak truthfully when engaging in professional activity. Expert truth-telling has come to be recognized as vital to the Kantian respect that is due to clients and others who must act based on professional advice; and to the imperative to sustain trust. It is therefore notable that economics does not generally require truth telling among its members. Against truth telling, in cases where what an economist says can impact social welfare, the profession tends toward “prosocial lying”—lying that is thought to be in society’s best interests. The …

Deindustrialization And Deaths Of Despair: Mapping The Impact Of Industrial Decline On Ill Health, Gabor Scheiring, David Stuckler, Lawrence King

PERI Working Papers

A growing literature on deaths of despair has argued that workers’ declining life expectancy in deindustrialized rustbelt areas in the U.S. and the associated deepening of health inequalities signal the profound existential crisis of contemporary capitalism. Competing explanations downplay the negative consequences of “creative destruction” and focus instead on unhealthy lifestyles. This article contributes to this debate by presenting the first empirical analysis of the role of deindustrialization in the deaths of despair epidemic that hit Eastern Europe in the 1990s. Drawing on the thematic analysis of 82 semi-structured interviews in four deindustrialized towns in Hungary, the article constructs a …

Zombie Prevalence And Survival, Debamanyu Das, Saurabh Roy

PERI Working Papers

We document the rise in the share of zombie firms starting from the late 1990s in the US economy across various sectors. We compare multiple definitions used in literature to identify zombies and discuss how they continue to survive. We find zombies issue more debt compared to non-zombies. A subset of zombies defined as growing zombies are able to raise equity too.

Looming Debt Crisis In Sub-Saharan Africa: Drivers, Implications And Policy Options, Léonce Ndikumana, Theresa Mannah-Blankson, Angelica Espiritu Njuguna

PERI Working Papers

This study explores the trends, patterns and drivers of recent debt accumulation in Sub-Saharan African countries with a view to sheding light on possible strategies to minimize adverse effects on the economies and ensure sustainable development financing. This is in light of concerns about a possible ‘looming debt crisis’ in the developing world, which have been exacerbated by the Covid-19 pandemic. The analysis in this study is based on existing data, supplemented by detailed information obtained from government sources for the cases of Ghana, Kenya, and Uganda. The evidence shows that Sub-Saharan African countries have experienced rapid accumulation of both …

Coronavirus Fiscal Policy In The United States: Lessons From Feminist Political Economy, Katherine A. Moos

PERI Working Papers

Using the U.S. fiscal response to Covid-19 in March and April 2020 as a case study, this paper explores the implications that the U.S. coronavirus legislation had on the societal distribution of responsibility for social reproduction among U.S. households, employers, and the U.S. federal government —and its effect on women and racialized minorities. It builds on feminist political economy research that argues that, prior to the coronavirus pandemic, economic crisis and stagnating conditions for workers in the United States had increased the role of households and the U.S. government in social reproduction, relative to the contribution of employers. This paper …

What’S Wrong With Modern Money Theory: Macro And Political Economic Restraints On Deficit-Financed Fiscal Policy, Thomas Palley

PERI Working Papers

The essential claim of MMT is sovereign currency issuing governments, with flexible exchange rates and without foreign currency debt, are financially unconstrained. This paper analyzes the macroeconomic arguments behind that claim and shows they are suspect. MMT underestimates the economic costs and exaggerate the capabilities of deficit financed fiscal policy. Those analytic shortcomings render it poor economics. However, MMT’s claim that sovereign governments are financially unconstrained is proving a popular political polemic. That is because current distressed economic conditions have generated political resistance to fiscal austerity, and MMT fits the moment by countering the neoliberal polemic that government lacks fiscal …

Gender And Work Patterns In Indian Cities: A Socio-Spatial Analysis, Vamsi Vakulabharanam, Sripad Motiram

PERI Working Papers

Using an original household survey conducted in Hyderabad and Mumbai that identifies intra-city spatial coordinates of residents, we present a socio-spatial analysis of gender and paid work. We show that the ease of movement through the city, allocation of care work related considerations and educational attainment are all crucial to understanding the labor force participation patterns of urban women. A gender lens identifies key facets of access and mobility characterizing urbanization in developing countries. Spatial heterogeneity of residence has very different outcomes for the labor force participation of women and men.

The Janus Faces Of Money, Property, And Governance: Fiscal Finance, Empire, And Race, Jamee K. Moudud

PERI Working Papers

This paper contributes to the literature on racial capitalism by deploying a key insight of the Law and Political Economy tradition which is that politics acting through the law plays a constitutive role in the monetary hardwiring of economies and their property rights. By focusing on two key elements of fiscal finance, central banking and taxation, the paper shows that while the pressures of democratic self-governance created one type of hardwiring in Britain and its white dominions racialized politics created a different type in the colonies of color. In short, the particular monetary hardwiring of the colonies of color effectively …

Beyond The Coronavirus: Understanding Crises Of Social Reproduction, Smriti Rao

PERI Working Papers

From a feminist political economy perspective, the unfolding of the coronavirus is a further reminder of the fundamental contradiction between a capitalist system that prioritizes profits, and a feminist ethic that prioritizes life-making or social reproduction. This paper argues for a more systematic understanding of crises of social reproduction under capitalism, stressing the difference between such crises for labour, and those for capital. The coronavirus crisis represents an extraordinary example of a crisis of social reproduction for capital, but this paper examines crises of social reproduction for capital and labour that arise from the more ordinary workings of capitalism. The …

The State's Response To The Crisis Of Neoliberalism: A Comparison Of The Net Social Wage In China And The United States, 1992-2017, Katherine A. Moos, Hao Qi

PERI Working Papers

We compare the welfare states and taxation regimes of the two largest economies in the world, China and the United States, from 1992 to 2017. We begin with a comparison of each country’s net social wage—that is, the difference between total benefits received by and taxes paid by labor—using two established methods. While the net social wage in the two countries exhibited similar trends, the increasing net social wage has distinctly different implications in the two countries due to their specific historical trajectories in the neoliberal era. In the US, the increasing net social wage reflects an ambivalent and reluctant …

How Race And Gender Shape Covid-19 Unemployment Probability, Armagan Gezici, Ozge Ozay

PERI Working Papers

Using the April 2020 Current Population Survey (CPS) micro dataset, we explore the racialized and gendered effects of the COVID-19 pandemic on the probability of being unemployed. The distribution of job losses from COVID-19 for women and men or for different racial/ethnic categories has been studied in the recent literature. We contribute to this literature by providing the first intersectional analysis of unemployment under COVID-19, where we examine the differences in the likelihood of unemployment across groups of White men, White women, Black men, Black women, Hispanic men and Hispanic women. Controlling for individual characteristics such as education and age, …

Potential Reserve Army And Diverging Paths Of Transition In Former State Socialist Economies, Zhun Xu

PERI Working Papers

Since the rise of neoliberalism in the world in the last quarter of the 20th century, many former state socialist economies also started their transition into different kinds of market economic models. Over the course of the last three decades or so, there emerged distinct paths of transition among these economies. This paper proposes a Marxian framework to help understand the three major models of transitions among former socialist economies: the Russian path, the Chinese path, and the Cuban/North Korean path. The framework focuses on the differences in working-class composition and in particular the size of the potential reserve army …

Bitter Chocolate: Wealth Extraction In Côte D'Ivoire, Jean Merckaert

PERI Working Papers

The cocoa sector has been at the heart of Côte d'Ivoire economy since independence. The country has become the largest producer of cocoa in the world (40%). In the two first decades of independence, impressive economic growth was fueled by cocoa exports. But the Ivorian miracle evaporated after the collapse of cocoa prices and the debt soaring. The country plunged into a serious economic crisis, followed by a political crisis that culminated in civil war in the early 2000s. The primary commodity sector in Côte d’Ivoire has been highly vulnerable to illicit financial flows. Large and persistent discrepancies between Côte …

A General Equilibrium Analysis Of The Impact Of The Covid-19 Outbreak On Turkey’S Economy And A Policy Alternative To Protect Labor Incomes, Ebru Voyvoda, A. Erinç Yeldan

PERI Working Papers

The COVID-19 pandemic is being experienced as a multidimensional systemic crisis based on the simultaneous manifestations of the supply, demand, and financial shocks. These effects have already been realized in the exacerbation of deep inequalities in income distribution, in functional, regional, and gender terms; in access to public services that are commercialized; and therefore, in an environment where poverty is experienced

with social exclusion due to severe inequalities of income.

The crisis has hit the Turkish economy under a conjuncture where the adverse effects of the 2018 financial turbulence have not yet been alleviated, and the macroeconomic balances have not …

Capital Flight From South Africa: A Case Study, LéOnce Ndikumana, Karmen Naidoo, Adam Aboobaker

PERI Working Papers

This paper examines the mechanisms, actors, enablers, and the institutional environment that facilitate capital flight from South Africa and the resulting accumulation of private wealth in offshore financial centers. We estimate that from 1970 to 2017, South Africa lost over $300 billion through capital flight, including through overinvoicing of imports and underinvoicing of exports. Net trade misinvoicing amounted to $146 billion over the 1998-2017 period alone. Export underinvoicing appears to be especially rampant in the case of mineral resources such as gold, silver, platinum and diamonds. While capital flight is not a new phenomenon in South Africa, it has accelerated …

Corporate Political Power And Us Foreign Policy, 1981-2002: The Role Of The Policy-Planning Network, Philip Luther-Davies, Kasia Julia Doniec, Joseph P. Lavallee, G. William Domhoff, Lawrence P. King

PERI Working Papers

Recent empirical work has offered strong support for ‘biased pluralism’ and ‘economic elite’ accounts of political power in the United States, according a central role to interest groups as a mechanism through which corporate influence is exerted. Here, we propose an additional channel of influence for corporate interests: the ‘policy-planning network,’ consisting of corporate- dominated foundations, think tanks, and elite policy-discussion groups. To evaluate this assertion, we coded the policy preferences of one key policy-discussion group, the Council on Foreign Relations (CFR), on 295 foreign policy issues during the 1981-2002 period. In logistic regression analyses, the preferences of economic elites …

Do Firms With Higher Energy Efficiency Have Better Access To Finance?, Philipp-Bastian Brutscher, Pauline Ravillard, Gregor Semieniuk

PERI Working Papers

Improving energy efficiency quickly is key to mitigating climate change and a large part of such improvements has to be implemented in firms. But since most energy efficiency improvements require upfront investments, good access to external finance is important. Theory suggests that information asymmetries may prevent lenders from including energy efficiency into their lending assessment, even though higher energy efficiency makes a firm more cost- competitive and its collateral worth more, especially if stringent climate change mitigation plans are implemented. Empirically, little is known about the impact of energy efficiency on access to external finance. Here we examine for the …

Delhi Green Deal, Rohit Azad, Shouvik Chakraborty

PERI Working Papers

In this paper, we propose a carbon tax policy for Delhi, the most polluted capital in the world, which will fundamentally change the energy mix of Delhi’s economy toward clean, green energy and will guarantee universal access to electricity, transport and food, up to a certain amount. Any carbon mitigation strategy needs to alter our dependence on fossil fuels, requiring a systemic overhaul of its energy mix. Implementing a carbon tax will mitigate emissions and mobilise revenue for our proposed re-distributive program of Right to Food, Energy and Travel (RFET). The policy is designed to prefer ‘the poor over the …

Public Investment In Home Health Care: A Win-Win Strategy For Employment And Public Health, Lenore Palladino

PERI Working Papers

This article will estimate the impacts of major public investment in the home health care industries. Investment in the home health care workforce would have important public health benefits, as those individuals who are most vulnerable could stay out of residential care centers. The focus of this article is on the employment and income effects of public investment in home care in a time of surging unemployment. By examining the effects of job stabilization and creation for the home health care workforce, I find that robust public investment in home health care can create millions of jobs, both directly in …

Political Economy Of The Environment: A Look Back And Ahead, James K. Boyce

PERI Working Papers

The political economy of the environment aims to deepen our understanding of the interplay among the economy, the environment, and human well-being. In contrast to neoclassical environmental economics, it pays attention not only to the net magnitude of costs and benefits but also to their distribution. In the realm of positive analysis – descriptions of how the world works – this means exploring the multiple ways in which the distribution of wealth and power affects environmental outcomes. In the realm of normative analysis – prescriptions for how the world should work – political economists advocate a range of criteria including …

Low-Carbon Transition Risks For Finance, Gregor Semieniuk, Isabella M. Weber

PERI Working Papers

Mitigating climate change requires information about the inequality in energy consumption. Recent contributions (Banerjee and Yakovenko, 2010; Lawrence et al., 2013; Yakovenko, 2010, 2013) have studied energy inequality through the lens of maximum entropy. They claim a weighted international distribution of total primary energy demand should approach a Boltzmann-Gibbs maximum entropy equilibrium distribution in the form of an exponential distribution, implying convergence to a Gini coefficient of 0.5 from above. The present paper challenges the validity of this claim and critically discusses the applicability of statistical equilibrium reasoning to economics from the viewpoint of social accounting. It is shown that …

Low-Carbon Transition Risks For Finance, Gregor Semieniuk, Emanuele Campiglio, Jean-Francois Mercure, Ulrich Volz, Neil R. Edwards

PERI Working Papers

The transition to a low-carbon economy will entail a large-scale structural change. Some industries will have to expand their relative economic weight, while other industries, especially those directly linked to fossil fuel production and consumption, will have to decline. Such a systemic shift may have major repercussions on the stability of financial systems, via abrupt asset revaluations, defaults on debt and the creation of bubbles. Studies on previous industrial transitions have shed light on the financial transition risks originating from rapidly rising ‘sunrise’ industries. In contrast, we argue here, based on a critical review of the literature, that a comprehensive …

The U.S.–China Trade Imbalance And The Theory Of Free Trade: Debunking The Currency Manipulation Argument, Anwar Shaikh, Isabella Weber

PERI Working Papers

The U.S.-China trade imbalance is commonly attributed to a Chinese policy of currency manipulation. However, empirical studies failed to reach consensus on the RMB misalignment. We argue that this is not a consequence of poor measurement but of theory. At the most abstract level the conventional principle of comparative cost advantage suggests real exchange rates will adjust so as to balance trade. Therefore, the persistence of trade imbalances tends to be interpreted as arising from currency manipulation facilitated by foreign exchange interventions. By way of contrast, the absolute cost theory explains trade imbalances as the outcome of free trade among …

Re-Making Of The Turkish Crisis, ÖZgüR Orhangazi, Erinç Yeldan

PERI Working Papers

Turkey entered a new phase of recession-cum-real economy crisis starting in the last quarter of 2018. In contrast to the previous crisis episodes of 1994, 2001 or 2009, when the economy has abruptly shrunk with a spectacular collapse of asset values and a severe contraction of output, the 2018- crisis is characterized by a prolonged recession with persistent low (negative) rates of growth, dwindling investment performance, debt repayment problems, secularly rising open unemployment, a spiraling currency depreciation and high inflation. Popular explanations from the mainstream tradition attribute this dismal performance to a lack of “structural reforms” and/or exogenous factors. Per …

A Three Class Predator-Prey Model With Financial Super Predators: The Financial Profit Squeeze, Jonathan Goldstein

PERI Working Papers

The primary purpose of this paper is to: 1) introduce a three-class predator-prey model with class interactions consistent with the NL era into the literature; 2) analyze the spectrum of different qualitative macroeconomic behaviors associated with the model; 3) focus on two particular outcomes – FK PS and a double reserve army (RA) – FK PS –both capable of producing cyclical and chaotic outcomes; and 4) use the FK PS to explain key stylized facts associated with the NL period. Given a sparing behavioral structure for the model where financial markets are not explicitly specified3, a full-on calibration exercise is …

Is Imperialism Passé In The 21st Century?, Rohit Azad, Shouvik Chakraborty

PERI Working Papers

Hardt and Negri in Empire argue that ”Imperialism is over.” On the contrary, others argue that not only is imperialism not dead, but its machinations have amplified during the phase of globalisation (Patnaik’s The Value of Money, Patnaik and Patnaik’s A Theory of Imperialism, John Smith’s Imperialism in the Twenty-First Century, among others). The reason for this sharp division among progressives is because of the current world scenario. On the one hand, some countries in the periphery (emerging economies) are growing faster than those in the core. On the other hand, the terms of trade has started moving in favour …

Government Policy’S Influence On Shadow Banking In China, Sara Hsu

PERI Working Papers

Shadow banking in China has been viewed by government officials and industry experts as illegitimate finance, but as a key means of financing by others. For the former, the industry has been seen as overly risky, potentially undermining the formal financial system. The latter see shadow banking as an increasingly important part of the financial system, filling a gap in the provision of finance to particular sectors and smaller firms.

In this paper, we seek to understand the effect of government views on shadow banking by analyzing the impact of government regulation on the shadow banking and non-shadow banking financial …

Monetizing Public Debt In Japan: An Empirical Critique Of Modern Money Theory, Junji Tokunaga

PERI Working Papers

Is Japan really a ‘success’ case that supports the Modern Money Theory (MMT) framework? The Bank of Japan (BOJ), the country’s central bank, has conducted more aggressive monetary quantitative easing since April 2013, which could effectively allow the Japanese government to monetize its cheaper public borrowing. This paper argues that the economic and financial situations in Japan have provided little support for the MMT view, for these reasons: (i) The huge issuance of public debt by the government and the large-scale supply of monetary base by the BOJ did not create enough new money required to revive the economy as …