Learning from distant cousins? Post-Keynesian Economics, Comparative Political Economy, and the Growth Models approach

Abstract

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 engagement of PKE with political economy and with CPE in particular.

The Political Economic Sources of Policy Non-design, Policy Accumulation, and Decay in Policy Capacity

“…Dependent financialisation refers to shallow domestic capital markets, dependence on capital flows to maintain rather stable rates of economic growth (Bortz & Kaltenbrunner, 2018). Given their dependence on capital flows, these countries are crisis prone: economies perform well during periods of abundant credit; however, the rise in indebtedness increases the likelihood of debt-led stagnation that causes a decline in private consumption, and, therefore, slowdown in economic growth (Stockhammer, 2022; Stockhammer & Kohler, 2022). Therefore, policymakers need to balance lower interest rates and sustained capital inflows to finance domestic consumption and investment.…”

“…Still, we do not know much about the political economic drivers of policy (non-) design and instrument choice, even if there have been calls for linking public policy scholarship with comparative political economy scholarship (John, 2018). In a similar vein, the emerging growth models and regimes strand in comparative political economy scholarship points to the need for studies that would examine how “economic developments shape political interests and how do these interests feed into policy making” (Stockhammer & Kohler, 2022, p. 15; Baccaro & Pontusson, 2016, 2022; Hassel & Palier, 2021).…”

The Post-Keynesian Perspective and Policy Recommendations for the Greek Financial Crisis

“…An export-driven growth model is based on weak domestic demand and increasing exports. Germany pursued this strategy aggressively, with average real wages stagnating before the crisis, resulting in the most severe increase in wage inequality among developed economies (Stockhammer and Köhler 2015). Both growth strategies require increasing debt-either increasing domestic debt (debt-driven growth) or foreign debt of the trade partners (export-driven growth) (Bieler, Jordan, and Morton 2019).…”

“…Adjustment of surplus-trade countries is inflationary and relies on exportdriven growth. Conversely, the adjustment of the trade-deficit countries is deflationary since they have to decrease demand to decrease imports and lower their prices and wages to restore competitiveness (Stockhammer and Köhler 2015). This process, of course, must be accomplished under the assumption that eurozone members abide by the rules of the Stability and Growth Pact (SGP).…”

ASEAN-FTA Impact on Rubber and Crude Palm Oil Export: An Empirical Evidence from IMT Countries

“…The national income is one of the three indicators to calculate the impact of an FTA on a country from their activity in international trade (Lloyd & Maclaren, 2004). Meanwhile, one of the components of the national income in the Keynesian model four sectors is the contribution of exports (Dünhaupt & Hein, 2019;Stockhammer & Kohler, 2022).…”