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New theoretical and empirical developments in political economy

Abstract

This proposal regards the visit of Prof. Deepankar Basu of the University of Massachusetts Amherst to the Department of Economics of the University of São Paulo during fourteen days on August 2019 (from the 4th to the 17th). Prof. Basu is an internationally well renowned scholar in the areas of classical political economy, political economy of development and applied econometrics. Prof. Basu will interact academically mostly with the applicant of this proposal and his department faculty colleagues Fernando Rugitsky and Laura Carvalho on several economic topics and issues of common research interest. The applicant already had some academic interaction with Prof. Basu during the several short and long academic visits made by the applicant to UMass Amherst in the last several years. Prof. Basu will teach a mini-course of four lectures of 100 minutes each to graduate students in economics at USP and other research institutions in the State of São Paulo, as this mini-course will be amply advertised and open to graduate students from these other institutions. These graduate lectures will be based on Prof. Basu's extensive research on theoretical and empirical issues in political economy, and by affinity will occupy the first four lectures of a graduate course entitled "History of Economic Ideas" which is regularly offered every year at USP. The first lecture will present a formalization of Marx's analysis of the process of reproduction of the aggregate social capital. The model borrows from recently published work of Prof. Basu and is used to address issues of interest to contemporary heterodox macroeconomists: (a) wage-led versus profit-led regimes of growth; and (b) impacts of rising levels of credit on economic growth. The second lecture draws on Marx's analysis of the distribution of surplus value, which is seen by Prof. Basu as offering a framework for understanding three key non-wage income streams in capitalist society: commercial profit, interest and rent. Each of these income streams are fragments of surplus value appropriated by different fractions of the non-working class. Drawing on recent work of Prof. Basu, the lecture will focus on the analysis of the fragment of surplus value that is appropriated by owners of non-producible resources: rent. The lecture will offer a formalization of Marx's ideas on rent and indicate some areas where it can be applied. The third lecture, also based on recently published work of Prof. Basu, will provide novel evidence on profitability trends for the non-farm non-financial corporate business, the non-financial corporate business and the corporate business sectors in post-war USA, and explore the underlying drivers of such behavior of profitability. The fourth lecture, also based on recently published work of Prof. Basu, will offer a summary discussion of the evolution of thinking on the investment function in heterodox macroeconomics, and then provide novel empirical evidence on both the short and long run impacts of profitability on capital accumulation. The empirical analysis will present estimates from several variants of linear dynamic panel data models using a state-industry data set from India's organized manufacturing sector between 1983 and 2007. Prof. Basu will also be available outside these lectures to interact with graduate students and other department faculty working on or interested in his areas of research interest. He will also interact academically with one of the applicant's student, whose master thesis on foreign direct investment and economic growth in Brazil is funded by FAPESP. As this thesis includes the development of a mathematical model drawing on some of the recently published work of Prof. Basu and an econometric testing of some of the predictions of such model (applied econometrics is one of the research areas of Prof. Basu), the possibility of closely interacting with Prof. Basu will be an invaluable research experience for the applicant's master student. (AU)

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