C.W.M. Naastepad


C.W.M. Naastepad is Senior Lecturer of Economics at Delft University of Technology in the Netherlands.

Research: Technology, Income Distribution and Employment

1999-present: Theoretical and empirical analysis of the links between technological progress, employment and labour market flexibility. Economic growth can be achieved by (1) putting in more labour or (2) raising the productivity of labour. In the past 20 years in the Netherlands, growth has been largely due to (1). However, future growth is likely to depend much more on raising productivity growth, which, in turn, requires a speeding up of technological change. The central question guiding my current research is: can a transition from a low-productivity to a high-productivity growth path be achieved, and what are the economic factors promoting or hampering this transition? The study focuses on the impact of shifts in the distribution of income between wages and profits —- via innovation incentives —- on the speed of technological progress.

Recent output:

The Dutch Productivity Slowdown: The Culprit at Last?

Is loonmatiging goed voor de export?

Research: Macroeconomic Policy

1988-1998: I developed a real-financial model with the aim of designing a fiscal policy package that would simultaneously reduce the budget deficit, inflation and the trade deficit while maintaining growth. The model explicitly analyses the relation between the budget and the credit creation process, and between bank behaviour and the real sector. Taking credit rather than money as the crucial financial variable, this model goes beyond earlier modelling approaches by (1) incorporating credit rationing, (2) recognising the dual role of credit for working capital and investment, and (3) allowing for endogenous switches between credit-constrained, capacity-constrained and demand-constrained regimes.
The model is the first for India in which real and financial markets are fully integrated. It is innovative in its endogenisation of financial regimes. In comparable models it is i{a priori} assumed that either the financial sector adjusts to production and prices in the real sector (the `endogenous money’ view) or production and prices adjust to the financial sector (the Monetarist school). My model allows for both possibilities. Depending on the chosen values of the policy parameters and exogenous variables, the model switches endogenously between the two regimes, depending on how fast (in response to the policy shock) credit demand rises relative to credit supply. This is made possible by a computer algorithm which I developed for this purpose. Thus, the relation between money, output and prices, and issues of `crowding in’ versus `crowding out’, are solved endogenously rather than a priori assumed.

Equations for the real-financial CGE model for India can be downloaded.

By this expert

Myths, Mix-ups and Mishandlings: What Caused the Eurozone Crisis?

Paper Conference paper | | Jul 2015

The Eurozone crisis has been wrongly interpreted as either a crisis of fiscal profligacy or of deteriorating unit-labour cost competitiveness (caused by rigid labour markets), or a combination of both.

Crisis and Recovery in the German Economy: The Real Lessons

Paper Working Paper Series | | Mar 2014

Owing to its strong dependence on exports, Germany was among the economies hit hardest by the financial crisis.