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Working Paper No. 602
June 11, 2010
Fiscal Responsibility: What Exactly Does It Mean?
AbstractThe use of government fiscal stimulus to support the economy in the recent economic crisis has brought increases in government deficits and increased government debt. This has produced an interest in sustainable government debt and the role of deficits in the economy. This paper argues in favor of a concept of "responsible" government policy, referring […]
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Working Paper No. 601
June 04, 2010
Too Big to Fail in Financial Crisis
AbstractRegulatory forbearance and government financial support for the largest US financial companies during the crisis of 2007–09 highlighted a "too big to fail" problem that has existed for decades. As in the past, effects on competition and moral hazard were seen as outweighed by the threat of failures that would undermine the financial system and […]
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Working Paper No. 600
May 26, 2010
Time and Poverty from a Developing Country Perspective
AbstractThis study is concerned with the measurement of poverty in the context of developing countries. We argue that poverty rankings must take into account time use dimensions of paid and unpaid work jointly. Reviewing the current state of the literature on this topic, our methodology introduces a critical but missing analytical distinction between time poverty […]
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One-Pager No. 3
May 20, 2010
“The Spectre of Banking”
AbstractA year and a half after the collapse in the financial markets, the debate about necessary “reforms” is still in its early stages, and none of the debaters seriously claims that his solution will in fact prevent a new crisis. The problem is that the proposed remedies deal with superficial matters of industrial organization and […]
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One-Pager No. 2
May 19, 2010
Reforms Without Politicians
AbstractCongress is currently debating new regulations for financial institutions in an effort to avoid a repeat of the recent crisis that brought the banking system to the brink. Some of those proposed changes would be valuable. But what nobody seems to have noticed is that the government already has the power to address some of […]
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Working Paper No. 599
May 18, 2010
Racial Preferences in a Small Urban Housing Market
AbstractThis paper use spatial econometric models to test for racial preferences in a small urban housing market. Identifying racial preferences is difficult when unobserved neighborhood amenities vary systematically with racial composition. We adopt three strategies to redress this problem: (1) we focus on housing price differences across microneighborhoods in the small and relatively homogenous city […]
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One-Pager No. 1
May 17, 2010
A Balancing Act
AbstractNow that America’s financial institutions have been brought back from the brink, the greatest threat to global economic stability is the gigantic trade imbalance between the United States, China, and other trading partners. A second big threat to economic stability, in the longer run, is global warming. Both problems are related to America’s addiction to […]
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Working Paper No. 598
May 17, 2010
The Economic and Financial Crises in CEE and CIS
AbstractThis paper looks at the countries of Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS), where economies have been most dramatically hit by the global crisis and its impact is likely to be most long-lasting, especially among poor and vulnerable groups. Using poverty as the main axis, it looks at aspects […]
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Public Policy Brief No. 111
May 11, 2010
Επιστροφή στην υστερία του ελλείμματος στις ΗΠΑ;
AbstractΣτο κείμενο αυτό, οι Yeva Nersisyan και ο L. Randall Wray υποστηρίζουν ότι τα ελλείμματα δεν επιβαρύνουν τις μελλοντικές γενεές με χρέη και δεν περιορίζουν τις ιδιωτικές δαπάνες. Οι συγγραφείς βασίζουν τα συμπεράσματά τους στην υπόθεση ότι ένα κυρίαρχο κράτος με δικό του νόμισμα δεν μπορεί να χρεοκοπήσει και στην άποψη ότι η κρατική χρηματοδότηση […]
Download Κείμενο Δημόσιας Πολιτικής No. 111 PDF (869.24 KB) -
Public Policy Brief No. 111
May 11, 2010
Deficit Hysteria Redux?
AbstractThis brief by Yeva Nersisyan and Senior Scholar L. Randall Wray argues that deficits do not burden future generations with debt, nor do they crowd out private spending. The authors base their conclusions on the premise that a sovereign nation with its own currency cannot become insolvent, and that government financing is unlike that of […]
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Working Paper No. 597
May 11, 2010
Bretton Woods 2 Is Dead, Long Live Bretton Woods 3?
AbstractThis paper sets out to investigate the forces and conditions that led to the emergence of global imbalances preceding the worldwide crisis of 2007–09, and both the likelihood and the potential sustainability of reemerging global imbalances as the world economy recovers from that crisis. The “Bretton Woods 2” hypothesis of sustainable global imbalances featuring a […]
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Working Paper No. 596
May 10, 2010
Infinite-variance, Alpha-stable Shocks in Monetary SVAR
AbstractThe process of constructing impulse-response functions (IRFs) and forecast-error variance decompositions (FEVDs) for a structural vector autoregression (SVAR) usually involves a factorization of an estimate of the error-term variance-covariance matrix V. Examining residuals from a monetary VAR, this paper finds evidence suggesting that all of the variances in V are infinite. Specifically, this study estimates […]
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Working Paper No. 595
May 09, 2010
The Recycling Problem in a Currency Union
AbstractThe recycling problem is general, and is not confined to a multicurrency setting: whenever there are surplus and deficit units—that is, everywhere—adjustment in real terms can be either upward or downward. The question is, Which? An attempt is made to formulate the problem in terms of the European Monetary Union. While the problem seems clear, […]
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Working Paper No. 594
May 08, 2010
Revisiting “New Cambridge”: The Three Financial Balances in a General Stock-flow Consistent Applied Modeling Strategy
AbstractThis paper argues that modified versions of the so-called “New Cambridge” approach to macroeconomic modeling are both quite useful for modeling real capitalist economies in historical time and perfectly compatible with the “vision” underlying modern Post-Keynesian stock-flow consistent macroeconomic models. As such, New Cambridge–type models appear to us as an important contribution to the tool […]
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Working Paper No. 593
May 07, 2010
A Contribution to the Theory of Financial Fragility and Crisis
AbstractThe paper examines three aspects of a financial crisis of domestic origin. The first section studies the evolution of a debt-financed consumption boom supported by rising asset prices, leading to a credit crunch and fluctuations in the real economy, and, ultimately, to debt deflation. The next section extends the analysis to trace gradual evolution toward […]
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Working Paper No. 592
May 06, 2010
The Global Financial Crisis and a New Capitalism?
AbstractThe 2008 global financial crisis was the consequence of the process (1) of financialization, or the creation of massive fictitious financial wealth, that began in the 1980s,; and (2) the hegemony of a reactionary ideology—namely, neoliberalism—based on self-regulated and efficient markets. Although laissez-faire capitalism is intrinsically unstable, the lessons of the 1929 stock market crash […]
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Public Policy Brief No. 110
March 18, 2010
Toward True Health Care Reform: More Care, Less Insurance
AbstractThe United States has the most expensive health care system in the world, yet its system produces inferior outcomes relative to those in other countries. This brief examines the health care reform debate and argues that the basic structure of the health care system is unlikely to change, because “reform” measures actually promote the status […]
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Working Paper No. 591
March 18, 2010
Global Imbalances, the US Dollar, and How the Crisis at the Core of Global Finance Spread to “Self-Insuring†Emerging Market Economies
AbstractThis paper investigates the spread of what started as a crisis at the core of the global financial system to emerging economies. While emerging economies had exhibited some resilience through the early stages of the financial turmoil that began in the summer of 2007, they have been hit hard since mid-2008. Their deteriorating fortunes are […]
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Working Paper No. 590
March 10, 2010
Determining Gender Equity in Fiscal Federalism: Analytical Issues and Empirical Evidence from India
AbstractDespite the policy realm’s growing recognition of fiscal devolution in gender development, there have been relatively few attempts to translate gender commitments into fiscal commitments. This paper aims to engage in this significant debate, focusing on the plausibility of incorporating gender into financial devolution, with the Thirteenth Finance Commission of India as backdrop. Given the […]
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Public Policy Brief No. 109
March 10, 2010
The Trouble with Pensions
AbstractPension funds have taken a big hit during the current financial crisis, with losses in the trillions of dollars. In addition, both private and public pensions are experiencing significant funding shortfalls, as is the government-run Pension Benefit Guaranty Corporation, which insures the defined-benefit pension plans of private American companies. Yeva Nersisyan and Senior Scholar L. […]
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Strategic Analysis
March 10, 2010
Getting Out of the Recession?
AbstractResearch Scholar Gennaro Zezza updates the Levy Institute’s previous Strategic Analysis (December 2009) and finds that the 2009 increase in public sector aggregate demand was a result of the fiscal stimulus, without which the recession would have been much deeper. He confirms that strong policy action is required to achieve full employment in the medium […]
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Working Paper No. 589
March 09, 2010
Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze—an Update to 2007
AbstractI find here that the early and mid-aughts (2001 to 2007) witnessed both exploding debt and a consequent “middle-class squeeze.” Median wealth grew briskly in the late 1990s. It grew even faster in the aughts, while the inequality of net worth was up slightly. Indebtedness, which fell substantially during the late 1990s, skyrocketed in the […]
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Working Paper No. 588
March 08, 2010
Decomposition of the Black-White Wage Differential in the Physician Market
AbstractThis paper proposes a difference-in-differences strategy to decompose the contributions of various types of discrimination to the black-white wage differential. The proposed estimation strategy is implemented using data from the Young Physicians Survey. The results suggest that potential discrimination plays a small role in the racial wage gap among physicians. At most, discrimination lowers the […]
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Working Paper No. 587
February 19, 2010
The Global Financial Crisis and the Shift to Shadow Banking
AbstractWhile most economists agree that the world is facing the worst economic crisis since the Great Depression, there is little agreement as to what caused it. Some have argued that the financial instability we are witnessing is due to irrational exuberance of market participants, fraud, greed, too much regulation, et cetera. However, some Post Keynesian […]
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