EAEPE

Joel Rabinovich and Niall Reddy

We are thrilled and honoured to be awarded the EAEPE Herbert Simon Young Scholar Prize for our paper “Financialization, shareholder value orientation and short-termism: Evidence from US non-financial corporations 1998 – 2018”. This was an arduous paper to write, requiring to merged five different databases and involving a very large number of regressions and robustness checks. Our results challenge much of the conventional wisdom on the subject - which can be daunting for young scholars. We are therefore doubly grateful for the support and encouragement conferred by this award.

Our paper investigates the claim that shareholder value orientation (SVO) encourages the adoption of short-termist business models focused on boosting returns to shareholders at the expense of long term performance and productivity upgrading. We note that the quantitative evidence in favour of this theory is mostly confined to showing that SVO lowers investment - without showing that this harms competitiveness. Instead of looking solely at investment, we look at how SVO impacts 'real performance' measured in terms of productivity, market share and profitability. We also adopt a novel empirical strategy, using measures of shareholder power and managerial incentivisation as our main independent variables, rather than trying to proxy for SVO. This allows us to account for the possibility that different kinds of shareholders have different effects on governance - something elided in much of the literature. We find that this is indeed the case. Our results suggest that short-termism is not an outcome linked to shareholder primacy in general, but rather to the influence of specific kinds of impatient investors. This suggests that it is necessary to account for the complex and varying strategies adopted by firms in the shareholder era, rather than assuming the existence of a single uniform business model.

Jan Schulz and Daniel Mayerhoffer

It is a great honor and privilege to have received this year’s EAEPE Herbert Simon Prize for our paper “A Network Approach to Consumption”.

Our paper attempts to model upward-looking emulative consumption à la Veblen from the bottom up. The relevance of this channel for the aggregate effects of inequality on growth, private debt, and financial fragility has been thoroughly demonstrated both theoretically and empirically, not least in many different contributions to EAEPE’s annual conference in the last years. Nevertheless, we found that these approaches often do not fully consider the structured nature of everyday interactions on which emulation is based. To address this issue, we integrate emulative consumption behavior into a network that replicates the salient stylized facts of inequality perceptions, both overall as well as along gendered and racialized dimensions, and of empirical network topologies.

The resulting model is an evolutionary alternative to lifecycle theories based on permanent income. We show that our model based on current income only is observationally equivalent to this workhorse formulation with much less demanding assumptions. We also demonstrate that the network topology and segregation in which this consumption takes place mediate the effect of inequality on aggregate consumption, offering a potential explanation for the ambiguous empirical results on consumption externalities in the applied literature. We are currently working to integrate our attempt into a Post-Keynesian framework in which we consider the interplay of the functional and personal distribution of income and a model with explicit consideration of the gendered and racialized dimension of inequality. In the spirit of EAEPE, we thus draw on the various institutionalist, complexity, evolutionary, feminist and Post-Keynesian strands and highlight their complementarities in our ongoing work. 

This recognition of our work is an immense boost to our motivation and fills us with joy. We are incredibly thankful for EAEPE not only for making our work visible but also for continuing to provide a much-needed forum for pluralist economics and being the source of many stimulating thoughts and inspiration for both of us. We are looking forward to many EAEPE annual conferences and discussions to come!

Jerome Deyris

I am very pleased and honored to be one of the recipients of the 2022 EAEPE Simon Young Scholar Prize for my paper on the emergence of a climate consensus at the European Central Bank. This article is part of my PhD thesis on the greening of central bank actions and consists in an empirical investigation of a specific institution. It uses a mixed methods empirical strategy, combining quantitative and qualitative discourse analysis with semi-structured interviews with central bankers and members of the European Parliament. The objective of the paper is to document how the balance of power within the Board of Governors has shifted in recent years, moving back and forth between a prudential perspective based solely on financial risk and a more ambitious promotional perspective seeking to foster the transition to a low-carbon economy.

Investigating this rapidly evolving topic has been challenging, and I am grateful to all the researchers who took the time to engage with my work and help a young doctoral student. This would not have been possible without networks and conferences such as EAEPE that bring together a community of heterodox political economists from Europe and beyond and allow young scholars to get advice and feedback from their peers. I am proud to be able to present my work there, and I am convinced that I will come back again this year with new ideas and perspectives to improve my research.