UPCOMING EVENT
The Levy Economics Institute is pleased to announce that it will hold The Hyman P. Minsky Summer Seminar in June 2010. The Seminar will provide a rigorous discussion of both theoretical and applied aspects of Minsky’s economics, with an examination of meaningful prescriptive policies relevant to the current economic and financial crisis. The Seminar will consist of a Summer School from June 19 to 26, followed by an International Conference on June 27, 28, and 29, both to be held at the Levy Institute in Annandale-on-Hudson, New York.
For more information, including how to apply, visit www.levy.org.
PUBLICATIONS
The Levy Economics Institute, with support from the Ford Foundation, held its annual Hyman P. Minsky conference at the Ford Foundation’s headquarters in New York City April 16–17. This year’s conference focused on current conditions and forecasts; macro policy proposals by the Obama administration and others; the rehabilitation of mortgage financing and the banks; financial market reregulation; proposals to limit foreclosures and modify servicing agreements; regulation of alternative financial products (derivatives and credit default swaps); the institutional shape of the future financial system; and international responses to the crisis.
Presenters were top policymakers, economists, and analysts, who offered their insights into and policy guidelines for the extraordinary challenges posed by the global financial crisis. Summaries of the speakers’ remarks are given here.
A group of experts associated with Economists for Peace and Security and the Initiative for Rethinking the Economy met recently in Paris to discuss financial and monetary issues. Senior Scholar James K. Galbraith summarizes the group’s viewpoints, which are largely at odds with the global political and economic establishment. The group warns that the crisis is not over, that policies set in motion are not sufficient, and that the goals set by the authorities are neither desirable nor possible.
There was general consensus among the group that the precrisis financial system should not be restored, that reviving the financial sector first was not the way to revive the economy, and that governments should not pursue exit strategies that permit a return to the status quo. Rather, the crisis exposes the need for profound reform to meet a range of physical and social objectives such as the development of regional monetary authorities and freeing developing countries from a compulsive need to serve the export sector on any terms.
The term BRIC refers to the fast-growing developing economies of Brazil, Russia, India, and China—a class of middle-income emerging market economies of relatively large size that are capable of self-sustained expansion. However, there are concerns about how the current financial crisis will affect the BRICs, and whether Brazil should remain within this group.
Senior Scholar Jan Kregel reviews the implications of the global crisis for developing countries, based on the factors driving global trade. He concludes that the key for developing countries is to transform from export-led to domestic demand–led growth. From this viewpoint, Brazil seems much better placed than the other BRIC countries because it already has a transition policy in place, along with government-sponsored infrastructure investment projects. Kregel suggests that these programs should be implemented in conjunction with a national jobs guarantee scheme.
Widespread income poverty has been a major challenge in postapartheid South Africa, and little attention has been paid to the linkages between poverty and time-use patterns. Using the 2000 time-use survey for South Africa and Tobit estimation methods, Burca Kizilirmak, Ankara University, and Research Associate Emel Memis analyze the impact of income poverty on time-use patterns.
The authors find that poverty and marriage increase women’s time spent on unpaid work but not that of men’s (i.e., the unpaid work burden is not shared equally within the household), while higher education increases (decreases) the time spent on social care by men (women). As a result, gender inequalities in time-use patterns should be considered when designing antipoverty policies and promoting gender equality.
Self-reported housing wealth is an important explanatory variable in empirical and behavioral models of decision making with respect to retirement, consumption, savings, and debt. The authors, who include Research Scholar Selcuk Eren, are the first to analyze the predictive power of self-reported housing wealth in an econometric model of sales prices. They find that, on average, homeowners overestimate the value of their properties by 5 to 10 percent due to large expected capital gains implicit in self-reported home values. Their study revealed a strong correlation between the accuracy of predictions over time and the business cycle (e.g., people buying properties during economic downturns tended to be more accurate about home values).
Research Scholar Rania Antonopoulos and Taun Toay, The Levy Economics Institute, address the gender dimensions of employer-of-last-resort policies, with a focus on the Expanded Public Works Programme (EPWP) in South Africa. They employ a social accounting matrix model to analyze the macro and micro implications of scaling up the community- and home-based care component of EPWP.
The authors note that public employment programs are linked to time spent on unpaid work, that the gender division of labor is replicated in the context of HIV and AIDS, and that the intersection of unpaid work, gender, and poverty has yet to receive adequate policy attention. They determine that a program can be designed to counter the very high unemployment rate as well as the skewed disposition of time spent on unpaid work by women.
Research Scholar Gennaro Zezza combines the Levy Institute’s macroeconometric model with the social accounting matrix approach to investigate the mechanics linking borrowing and expenditure to growth and financial balances. He sheds light on how the dynamics of financial balances can be applied as a guide to the prospects of an economy, and how fiscal policy relates to imbalances and economic growth.
In Zezza’s view, the current financial and economic crisis is not a consequence of financial industry and policy failures but rather the inevitable result of an unbalanced growth process that began in the 1980s. He concludes that government expenditures should play a role in sustaining aggregate demand and that larger external deficits in the medium term should be countered through policy intervention.
The Report is aimed at a diverse general audience interested in policy matters. It includes editorials by Levy Institute research staff, summaries of new publications, synopses of conferences and other events, and news of the Institute and its scholars.
