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  Policy Notes No. 4

  Effects of Forced Formalization (Demonetization) in the Indian Economy 

  Nischal Dhungel examines the impact of India’s demonetization experiment—an effort at “forced formalization” of the economy. He urges a more organic approach to formalization, pairing efforts to bring the unbanked population into the banking system with greater funding and accessibility for India’s signature employment guarantee program.
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  Institute Scholar Michalis Nikiforos’ op-ed “Markups, Profit Shares, and Cost-Push-Profit-Led Inflation” featured by The Institute for New Economic Thinking

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  Institute Scholar Michalis Nikiforos and Simon Grothe’s article “Markups, Profit Shares, and Cost-Push-Profit-Led Inflation” was featured by the Institute for New Economic Thinking

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  Working Paper No. 1028

  Contractionary Effects of Foreign Price Shocks (and Potentially Expansionary Effects of Inflation)

  Using the model proposed in Krugman and Taylor’s “Contractionary effects of devaluation” (1978), we examine the macroeconomic effects of shocks to foreign prices. We show that these shocks can be contractionary for two reasons: (i) because they imply a loss of income if an economy has a trade deficit or import prices increase proportionally more […]
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  Working Paper No. 1027

  Structural Change and Gender Sectoral Segregation in Sub-Saharan Africa

  Structural change has long been at the core of economic development debates. However, the gender implications of structural change are still largely unexplored. This paper helps to fill this gap by analyzing the role of structural change in the gender distribution of sectoral employment in sub-Saharan African countries. I employ aggregate and disaggregate measures of […]
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  Working Paper No. 1026

  Banking Sector, Distributive Conflict, and Monetary Theory of Distribution

  This paper analyzes the implications of distributional contrast for the monetary theory of distribution. The first step is to try to introduce the banking sector within Pivetti's monetary distribution theory approach. Pivetti in fact does not analyze the links between the central bank and the banking sector. It therefore seems interesting to study what role […]
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  Working Paper No. 1025

  Unconventional Monetary Policy or Automatic Stabilizers?

  The purpose of public policy, expansionary or contractionary, is to encourage the expansion of income, output, and employment. Theory decides the nature and kind of policy, and the underlying mechanics that result in expansion. Keynes (1964) brings money and a monetary production economy to the forefront of economic analysis, yet in the General Theory, he […]
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  Working Paper No. 1024

  When Minsky and Godley Met Structuralism

  Underdevelopment is often conceived as being reproduced domestically. This paper emphasizes the international forces that enable the persistence of underdevelopment. We first explore how the currency hierarchy imposes a dependency relation between developed and underdeveloped economies. We improvise and quantify the currency hierarchy using ratios from the consolidated sovereign balance sheet. Using the improvisation of […]
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  Policy Notes No. 3

  In Defense of Low Interest Rates

  In recalling John Maynard Keynes’s revolutionary theory of interest, reviewing the doctrines Keynes sought to overthrow, and analyzing the structural transformations of the US economy, James K. Galbraith maintains there is no alternative to a policy of low interest rates. However, such a policy cannot be effective, he argues, without a radical restructuring of the […]
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  Strategic Analysis

  Will the US Debt Ceiling Deal Derail the Pandemic Recovery?

  In this Strategic Analysis, Dimitri B. Papadimitriou, Michalis Nikiforos, Giuliano T. Yajima, and Gennaro Zezza discuss how the current state and structural features of the US economy might affect its future trajectory. The recent recovery after the pandemic has been remarkable, when compared to previous cycles, and offers evidence of the efficacy of fiscal policy. […]
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  Working Paper No. 1023

  Climate Change and Fiscal Marksmanship

  According to the theory of efficient markets, economic agents use all available information to form rational expectations. The rational expectations hypothesis asserts that information is scarce, the economic system generally does not waste information, and that expectations depend specifically on the structure of the entire system. Fiscal marksmanship—the accuracy of budgetary forecasting—can be one important […]
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  Working Paper No. 1022

  Has the Time for a European Job Guarantee Policy Arrived?

  As country after country in the European Union is called to respond to the current challenge of our time—high inflation and declining real wages—governments must engage in a transformative agenda and go beyond emergency energy vouchers and income support cash-transfers. And if the goal is to lead the way to a resilient and sustainable European […]