Jonathan P. Goldstein

The Effect of Motorcycle Helmet Use On the Probability of Fatality and the Severity of Head and Neck Injuries

This article evaluates the effectiveness of motorcycle helmets in accident situations. A latent variable model is developed and estimated. It is concluded that (1) motorcycle helmets have no statistically significant effect on the probability of fatality; (2) helmets reduce the severity of head injuries; and (3) past a critical impact speed, helmets increase the severity of neck injuries. Further analysis establishes the qualitative and quantitative nature of the head-neck injury trade-off.

The Cyclical Profit Squeeze: A Marxian Microfoundation

This paper develops a microfoundation for the cyclical profit squeeze theory of crisis. An optimal cyclical mark-up pricing policy is derived. The mark-up rises from initial trough until midexpansion and then declines until the terminal trough. The necessary and sufficient conditions for the resulting decline in the profit rate are the capital-labor struggle which determines the behavior of costs and the competition among capitals which restricts rising costs from being fully passed on. It is also shown that this optimal mark-up behavior serves as a microfoundation for a profit squeeze theory of the business cycle.

Introduction: The Political Economy of Financialization:

1. A search of the key word “financialization” on the EconLit database resulted in 79 papers with the earliest dating to the year 2000. Of the 79 papers, around 60 percent can be associated with the political economy literature of which 17 entries derive from the volume edited by Epstein (2005). 2. Despite Hilferding’s Marx-inspired approach, I include other heterodox approaches to financialization that analyze similar issues as following in the tradition of Hilferding. 3. In addition to the papers in Epstein (2005), see Demir (2007), Crotty (2003, 2005), Orhanganzi (2008a, 2008b, 2009), Krippner (2005), Stockhammer (2004), and Goldstein (2008, 2009a, 2009b).

Predator–Prey Model Estimates of the Cyclical Profit Squeeze

This paper extends the empirical literature on the cyclical profit squeeze (CPS) theory of crisis by developing a multivariate model with superior decomposition methods. A structural time series (unobserved components) model with trend and structural VAR components is employed. The VAR captures the dynamic cyclical interaction between unemployment and profits share of income and is interpreted as a linear version of Goodwins (1967) predator-prey model. Model extensions incorporate the accumulation process and structural shifts. Estimation results for the US economy are used to sort out the controversial relevance of the CPS in the post-1970 period. It is concluded that the CPS is relevant during the period from 1949 to 1985, but is moderately weakened in the post-1970 period. Inconclusive statistical support for the CPS is found for the post-1985 era.

The Simple Analytics and Empirics of the Cyclical Profit Squeeze and Cyclical Underconsumption Theories: Clearing the Air

Abstract This paper examines the controversies that exist between the cyclical profit squeeze (CPS) and nutcracker theories of cyclical crisis. The simple analytics and empirics of both theories are examined. It is shown that the criticisms of the CPS advanced by Sherman (1997) are invalid, and that the two components of the nutcracker theory—a cyclical underconsumption crisis plus a non-labor cost-induced decline in profits—have little relevance for explaining postwar U.S. business cycles.

Marxian Microfoundations: Contribution or Detour?

This article celebrates and critically examines the twenty-five-year productive, yet highly controversial, Marxian microfoundations (MM) literature. The contentious methodological debate over MM that is dominated by fundamentalist positions on both sides is evaluated and rejected. An alternative, centrist, methodological defense of MM is developed. Having established a methodological basis for MM, the micro contributions of the existing literature are evaluated in the following subject areas: methodology, accumulation and crisis, labor process and labor market segmentation, technical change, and class and exploitation. I conclude that although the MM literature has made significant contributions to strengthening Marxian arguments/propositions, there is room for improvement in the areas of integrating existing MM with common themes, improving modeling techniques, developing better linkages between micro and macro behaviors, expanding the analysis to neglected topics, and empirically verifying underlying assumptions.

The Existence, Endogeneity, and Synchronization of Long Waves: Structural Time Series Model Estimates

In the spirit of David Gordons application of advanced econometric techniques to problems in political economy and his interest in long waves, this paper develops a structural time series model for testing the existence, endogeneity, and synchronization of long waves in the output series for 11 countries. The results show a strong long wave pattern with a high degree of endogenous behavior in 8 of 11 GDP series. Strong evidence for the synchronization of long waves based on international transmission mechanisms is found, while weaker evidence exists for synchronization based on similar institutional structures. Other long wave hypotheses are also addressed.

Is the Endogenous Business Cycle Dead

A clearly defined dichotomy exists in the business cycle literature between endogenous and exogenous cycles. Exogenous cycles are either temporary, heavily damped random deviations from a stable long-run growth path or permanent stochastic fluctuations in the growth path which both require repeated stochastic impulses to generate typically observed recurrent and irregular fluctuations. In contrast, endogenous cycles are systematic (deterministic), self-generating recurrent cycles that result from the inherent instability (structure) of the underlying economy. The most recent and most severe critiques of endogenous theory are empirical in nature and stem from the unit root debates which contrast trend stationary (TS) and difference stationary (DS) models. Despite this critique, the evolution of this methodology has produced conflicting results with respect to the most appropriate model. More importantly this approach implicitly rejects, through the use of an overly restrictive specification, endogenous cycles in favor of stochastic cycles. In this light, the purpose of this paper is to justify and apply an alternative, more general, estimation framework that includes DS, TS and endogenous cycles as nested alternatives. In particular, I employ a structural time series (STS) or unobserved components methodology which allows for a direct empirical test of endogenous cycle theory against stochastic alternatives and/or mixed stochastic-endogenous models. The integration of secular regime shifts into the basic STS model effectively introduces nonlinearities and thus moves the analysis one step beyond simple linear models. This general approach which relies on economic theory for model specification is superior to the ARIMA-based unit root methodology which relies solely on the data to identify the structure of macro time series. Using this approach, I estimate STS models for seven relevant U.S. macroeconomic time series and find that endogenous cycles play a fundamental role in characterizing the data generation process. The remainder of this paper is organized in the following manner. Section II reviews the restrictive nature of the unit root-ARIMA methodology. Section III offers an alternative approach. Section IV presents estimation results and section V contains my conclusions.

Heterodox Macroeconomics: Crotty's Integration of Keynes and Marx

While heterodox macroeconomic theories agree on a set of general principles, there is far less agreement on specific behavioral relations. With the goal of developing a more potent heterodox framework through the integration of Keynesian, Marxian, and institutionalist perspectives, I consider the seminal work of James Crotty. Crotty has developed the building blocks of an integrated heterodox macro theory that revolve around the nexus of the concepts of fundamental uncertainty, financial fragility, impatient finance, irreversible investment, adversarial class relations, the Marxian concept of competition, Marxian crisis theory, and effective demand. This integration considers numerous dichotomies/regime shifts that are useful for understanding the path of capitalist development.

The profit squeeze is supported by the PW cycle indicator

This paper questions Van Lears (1999) conclusion that the cyclical profit squeeze mechanism is irrelevant for understanding post World War II business cycles. It is shown that his conclusion erroneously emanates from either a misreading of the evidence or the application of an overly restrictive and irrelevant condition for the existence of a profit squeeze. It is concluded that Van Lears data and other data in the literature support the cyclical profit squeeze as a viable explanation of post war cycles.