Alternative Approaches in Macroeconomics: Essays in Honour of John McCombie

373 Pages·2018·5.715 MB·English

by  Philip Arestis (eds.)

ALTERNATIVE
APPROACHES IN
MACROECONOMICS
Essays in Honour of John McCombie
Edited by
Philip Arestis
Alternative Approaches in Macroeconomics
Philip Arestis
Editor
Alternative
Approaches in
Macroeconomics
Essays in Honour of John McCombie
Editor
Philip Arestis
Department of Land Economy
University of Cambridge
Cambridge, United Kingdom
ISBN 978-3-319-69675-1 ISBN 978-3-319-69676-8 (eBook)
https://doi.org/10.1007/978-3-319-69676-8
Library of Congress Control Number: 2018930525
© The Editor(s) (if applicable) and The Author(s) 2018
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature
The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Foreword
It is a pleasure and privilege to write a short Foreword to this volume
edited by long-standing mutual friend Philip Arestis in honour of my
long-standing friend, John McCombie.
John McCombie is one of the finest scholars I have ever met. Most of
all, I admire his integrity, independence and courage in taking on the
entrenched mainstream use of aggregate production functions, culminat-
ing in his definitive volume with Jesus Felipe, The Aggregate Production
Function and the Measurement of Technical Change: ‘Not Even Wrong’
(Edward Elgar 2013). He is also internationally respected for his writings
on regional economics.
John McCombie is a shining example of what university and commu-
nity citizenship should be, and so it is fitting that he should now be hon-
oured in this splendid volume, with contributions from friends and
colleagues.
GC Harcourt
Emeritus Reader in the History of Economic Theory, Cambridge (1998)
Emeritus Fellow Jesus College, Cambridge (1998)
Professor Emeritus, Adelaide (1988)
Honorary Professor, UNSW Sydney (2016–)
v
Contents
1 Introduction 1
Philip Arestis
2 John McCombie’s Contribution to the Applied Economics
of Growth in a Closed and Open Economy 23
A. P. Thirlwall
3 Why Neither Samuelson’s Neoclassical Synthesis
Keynesianism Nor New Keynesianism Theory Is
Compatible with Keynes’s General Theory Explanation
of the Cause of Unemployment 57
Paul Davidson
4 The Role of Commercial Banks and Financial
Intermediaries in the New Consensus Macroeconomics
(NCM): A Preliminary and Critical Appraisal of Old
and New Models 77
Giuseppe Fontana and Marco Veronese Passarella
5 Microeconomics, Mesoeconomics and Macroeconomics 105
Malcolm Sawyer
vii
viii Contents
6 A Coherent Approach to Macroeconomic Theory
and Economic Policies 127
Philip Arestis
7 Is the Share of Income of the Top One Per cent Due to
the Marginal Product of Labour or Managerial Power? 155
Marta R. M. Spreafico
8 Macroeconomic Lessons from the Financialisation
Process 183
Jesús Ferreiro
9 Financial Instability and Speculative Bubbles:
Behavioural Insights and Policy Implications 209
Michelle Baddeley
10 Sophistication, Productivity and Trade: A Sectoral
Investigation 235
João P. Romero and Gustavo Britto
11 Urban Growth in South Asia: A View from Outer Space 269
Mark Roberts
12 Production Functions, the Kaldor- Verdoorn Law
and Methodology 303
Marc Lavoie
13 Is the Balance of Payments Constrained Growth Rate
Time-Varying? Exchange Rate Over Valuation,
Policy-Induced Recessions, Deindustrialization,
and Long Run Growth 331
Mark Setterfield and Selen Ozcelik
Index 355
Notes on Contributors
Philip Arestis is Professor and Director of Research, Cambridge Centre for
Economics and Public Policy, Department of Land Economy, University of
Cambridge, UK, and Professor of Economics at the Department of Applied
Economics V, University of the Basque Country, Spain. He is also Distinguished
Adjunct Professor of Economics, University of Utah, USA, and Research Fellow,
Levy Economics Institute, New York, USA. He served (2005–2013) as Chief
Academic (External) Adviser to the UK Government Economic Service (GES)
on Professional Development in Economics. He is holder of the ‘Queen Victoria
Eugenia’ award of the British Hispanic Chair of Doctoral Studies and has been
awarded ‘homage’ by the Brazilian Keynesian Association (AKB) for his contri-
bution to Economics in Brazil. He is holder of the FAcSS (Fellow of the Academy
of Social Sciences). He has published as sole author or editor, as well as co-
author and co-editor, a number of books and papers in academic journals.
Michelle Baddeley is Professor at the Institute for Choice, UniSA Business
School, University of South Australia, and was Professor in Economics and
Finance of the Built Environment at UCL; previously she was Fellow and
Director of Studies (Economics) at Gonville & Caius College, Cambridge. She
has undergraduate degrees in Economics and Psychology from University of
Queensland and an MPhil/PhD (Economics) from University of Cambridge.
She has written books and articles and papers across a range of topics, including
behavioural economics, neuroeconomics, cybersecurity, applied macroeconom-
ics, regional economics and development economics. She is on the editorial
ix
x Notes on Contributors
boards of the Journal of Cybersecurity, the American Review of Political Economy
and the Journal of Behavioral Economics and Policy, as well as the Society for the
Advancement of Behavioral Economics (SABE)’s advisory board. She has an active
interest in public policy and was a member of DEFRA’s Hazardous Substances
Advisory Committee 2013–2017, is an Associate Fellow—Cambridge Centre
for Science and Policy—and was a member of the Blackett Review Expert Panel:
FinTech Futures 2014–2015.
Gustavo Britto obtained a PhD from the University of Cambridge in 2008,
where he worked at the Land Economy Department. He is currently a professor
at the Department of Economics, Universidade Federal de Minas Gerais (UFMG),
Brazil, where he lectures Development Economics to undergraduate and post-
graduate students. He was the Head of the Department of Economics (UFMG)
from 2014 to 2016. Currently, he is the vice-coordinator of the Postgraduate
Programme in Economics at the Center for Development and Regional Planning
(Cedeplar-UFMG). He has carried out research and supervisions on development
economics and growth, balance-of-payments constrained and cumulative causa-
tion growth models, increasing returns to scale and regional productivity growth,
regional development and planning, global innovation networks and university-
industry interactions and on economic complexity and structural change. The
results of these efforts can be seen in journals such as the Cambridge Journal of
Economics, Journal of Post Keynesian Economics, Metroeconomica and Scientometrics.
Paul Davidson holds a bachelor’s degree in Biochemistry from Brooklyn
College, a MBA degree from the Baruch School of Business at City College of
New York, and a PhD from the University of Pennsylvania. Davidson has the
Emeritus Chair of Excellence in Political Economy at the University of Tennessee.
He has held professorships at the Wharton School of Business, the University of
Pennsylvania and at Rutgers University where he was also the Head of the
Economics Discipline. He also held visiting appointments at the University of
Bristol and Cambridge University in the UK, as well as Visiting Professorships
at the University of Nice and the University of Strasbourg. He was the co-
founder of the Journal of Post-Keynesian Economics. He is a member of the
Advisory Board of the Institute for New Economic Thinking. Davidson is the
author or co-author of 31 books and more than 200 professional articles.
Jesús Ferreiro is Professor of Economics at the Department of Applied
Economics V, the University of the Basque Country UPV/EHU, in Bilbao,
Notes on Contributo rs xi
Spain; he is also an Associate Member of international research centres, like the
Centre for Economic and Public Policy, University of Cambridge (UK), and
the Núcleo de Investigação em Finanças Públicas e Política Monetária (NIFIP),
at the University of Porto. His main research interests are in the areas of fiscal
and monetary policies, labour market and wages and incomes policies, finan-
cialisation processes, Eurozone, European economies and international econ-
omy. He has published a high number of papers on these topics in edited books
and also in international journals such as American Journal of Economics and
Sociology, Applied Economics, Economic and Industrial Democracy, European
Planning Studies, International Labour Review, International Review of Applied
Economics, Journal of Economic Issues, Journal of Economic Policy Reform, Journal
of Post Keynesian Economics, Panoeconomicus and Transnational Corporations,
among others.
Giuseppe Fontana is Professor of Monetary Economics at the University of
Leeds (UK), Associate Professor at the University of Sannio (Italy), Research
Associate at the Levy Economics Institute (USA) and Associate Member at the
Cambridge Centre for Economic and Public Policy (University of Cambridge,
UK). He is a member of the co-ordinating team and work-package leader of the
€8 million EU FP7 research project FESSUD (http://fessud.eu/). He is an
expert of the Endogenous Money Theory and the New Consensus
Macroeconomics Theory and of monetary and fiscal policies. He has authored
and co-authored over 30 book chapters and over 50 international journal papers.
He has also co-edited several books, including Macroeconomic Theory and
Macroeconomic Pedagogy (Palgrave/Macmillan, 2010) with Mark Setterfield and
The Global Economic Crisis: New Perspectives on the Critique of Economic Theory
and Policy (Routledge, 2011) with Emiliano Brancaccio. He has also published
the monograph Money, Time, and Uncertainty (Routledge, 2010).
Marc Lavoie holds a senior research chair from the University Sorbonne Paris
Cité, located at the University of Paris 13. He has previously taught for 37 years
at the Department of Economics at the University of Ottawa. He is also a
research fellow at the Macroeconomic Research Institute of the Hans Böckler
Foundation in Düsseldorf and a research associate at the Broadbent Institute in
Toronto. Lavoie has published close to 200 articles or book chapters in a wide
variety of fields, in particular macroeconomics and monetary economics. With
Wynne Godley he has written Monetary Economics: An Integrated Approach to
Money, Income, Production and Wealth (2007). He has recently edited Wage-led