Besides organising our various events and making the case for pluralism in economics, some of our members also actively pursue independent research in the areas they are interested in. Two of their papers have recently been published, so we thought it might be nice to share them with our followers.
Max Schröder, Honorary Secretary of GURWES and a fourth year student of Economics and Philosophy has been researching alternative measures of inequality. Some of the outcomes of this research have now been published as an article in Groundings, an undergraduate peer-reviewed journal in the arts, humanities, and social sciences, published annually by Glasgow University Dialectic Society:
Mythical Measures: The Problem of Objective Inequality Measurement in Economics and the Social Sciences
The Gini coefficient, one of the most widely used inequality measures in economics, is thought to report income disparity with a reliable degree of objectivity. However, a critical assessment of the Gini’s implicit normative assumptions reveals that this objectivity is overstated. Moreover, this critique can be extended to other indices as well, uncovering a more general worry that the perception of distributive justice, which determines the ideal level of inequality underlying such indices, is necessarily subjective. As a result, the prospect of a mutually intelligible and transparent discussion on inequality suffers – both at the scientific and policy level. The implication of this finding is that more work needs to be done in specifying the normative foundations of inequality measures.
The full issue of Groundings containing this article can be downloaded here.
Severin Reissl, President of GURWES and a fourth year student of Economics has used an analytical method he worked with during a summer internship to produce a paper intervening in the debate within the post-Keynesian school on the impact of debt on effective demand. This article has now been published as a working paper by the Macroeconomic Policy Institute (IMK) after being presented at the 2014 annual conference of the Research Network Macroeconomics and Macroeconomic Policies (fmm):
The return of black box economics – a critique of Keen on effective demand and changes in debt
In a paper for the Review of Keynesian Economics, Steve Keen recently provided a restatement of his claim that “effective demand equals income plus the change in debt”. The aim of the present article is to provide a detailed critique of Keen’s argument using an analytical framework pioneered by Wolfgang Stützel which has recently been developed further.Using this framework, it is shown that there is no strictly necessary relationship whatsoever between effective demand and changes in the level of gross debt. Keen’s proposed relation is shown not to hold under all circumstances, and it is demonstrated that where it does hold this is due to variations in the `velocity of debt’-variable he introduces. This variable, however, lacks theoretical underpinning. The article also comments on Keen’s proposal that trade in financial assets should be included in effective demand, arguing that this undermines the concept of effective demand itself. It is also shown that many weaknesses in Keen’s argument stem from a lack of terminological clarity which originates in his interpretation of the works of Hyman Minsky.