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Pavlina Tcherneva joins Laura Flanders to discuss the need for a more gender-aware economics: [iframe width=”427″ height=”240″ src=”https://www.youtube.com/embed/fqmy5F98SAs” frameborder=”0″ allowfullscreen></iframe]

Designed as a terminal degree with a professional focus, the Levy Economics Institute Master of Science in Economic Theory and Policy offers students an alternative to mainstream graduate programs in economics and finance. This innovative two-year program combines a rigorous course of study with exceptional opportunity to participate in advanced economics research, with direct access to the Institute’s global network of researchers. Application deadlines are November 15 for Early Decision and January 15 for Regular Decision. Scholarships are available. Visit bard.edu/levyms for more information. Click here to apply. Learn about the Levy M.S. by joining one of our online information sessions hosted by Institute scholars: Wednesday, October 5, 3:00 p.m. EDT, with Research Scholar Michalis Nikiforos Tuesday, October 11, 11:00 a.m. EDT, with Ajit Zacharias, Senior Scholar and Distribution of Income and Wealth Program Director Tuesday, October 18, 10:00 a.m. EDT, with Senior Scholar and Bard College Professor of Economics L. Randall Wray The program application fee will be waived for all prospective students who attend. Click here for details.

by Felipe Rezende Part IV This last part of the series (see Part I, II, and III here, here, and here) will focus on the Brazilian response to the crisis.   1. What Should Brazil Do? The current Brazilian crisis fits with Minsky’s theory of instability (see here, here, and here). The traditional response to a Minsky crisis involves government deficits to allow the non-government sector to net save. That is, if the private sector desire to net save increases, then fiscal deficits increase to allow it to accumulate net financial assets. The sharp increase in budget deficits in 2015 comes as no surprise. Rezende (2015a) simulated a scenario in which we have rising government deficits to offset current account deficits, to allow the domestic private sector balance to generate financial surpluses. In this case, in the presence of current account deficits equal to 4% of GDP, to allow the private sector to net save 2% of GDP, it would require government deficits equal to 6% of GDP.  If the private sector is going to save 5% of GDP (equal to the 2002-2007 average pre-crisis) and a current account deficit equal to 4% of GDP then we must have an overall government budget in deficit equal to 9% of GDP. Given the current state of affairs, government deficits of this… Read More

by Felipe Rezende Part III This part of the series (see Parts I and II, here and here) will focus on macroeconomic and microeconomic aspects of financial fragility and the provision of liquidity. Minsky’s framework not only sheds light on how to detect unsustainable financial practices, but the position adopted in this paper is that the current Brazilian crisis does fit with Minsky’s instability theory. This is a Minsky crisis in which during economic expansions market participants show greater tolerance for risk and forget the lessons of past crises so economic units gradually move from safe financial positions to riskier positions and declining cushions of safety.

Jim Vrettos, a sociologist at John Jay College and host of “The Radical Imagination”, interviewed the Levy Institute’s Randy Wray on how the discipline of economics has gone astray. Wray’s story begins in the late 1960s, with what he describes as a reaction against “New Deal economics.” The interview ends with a discussion of the ongoing US presidential election. [iframe width=”427″ height=”240″ src=”https://www.youtube.com/embed/5P_J9IJqxaY?;start=200″ frameborder=”0″ allowfullscreen></iframe]

by Felipe Rezende This series will discuss at length the underlying forces behind Brazil’s current crisis. (See Part I here) Part II Building on Keynes’s investment theory of the cycle, Minsky’s work suggests that the structure of the economy becomes more fragile over a period of tranquility and prosperity. That is, endogenous processes breed financial and economic instability. While Minsky adopted Keynes’s “investment theory of the cycle,” he added a financial theory of investment, with a detailed exposition of the theory in his book John Maynard Keynes (1975), which put at the forefront the interrelation between investment decisions and the financial structure designed to allow economic units to take positions in assets by issuing debt. In this regard, debt accumulation is at the core of Minsky’s instability theory. His financial theory of investment incorporated Kalecki’s approach in which aggregate profits are created, mostly, by the autonomous components of demand (Minsky 1986, 1989). One can add to this analysis Godley’s three balances approach, which explores the interlinkages between the government sector, the private sector, and the external sector. This means that a surplus must be matched by an equal deficit and flows accumulate to stocks. In this regard, Godley’s framework sheds light on the identification of financial fragility at the macro level, in which, to accumulate financial wealth, the private sector… Read More

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A crowdfunding campaign starting October 2016, on Indiegogo: Overall aim:  To complete the publication of all of Keynes’s remaining unpublished writings of academic significance. Only about one third were published in the Royal Economic Society edition. A huge quantity of valuable unpublished material remains, scattered across 60 archives in 6 countries. Aim of this campaign:  Preparation of the Eton and early Cambridge volumes. Campaign start:  11 October 2016. To locate project: Google ‘JMK Writings Project Indiegogo.’ It is also planned, with publisher cooperation, for the campaign to assist selected universities in developing countries. How you can help: Spread the word prior to the campaign launch – to academic colleagues (in economics or elsewhere), students in classes, conference participants, policy-makers, parliamentarians, philanthropists etc. Make, and encourage, donations, of ANY size, according to your situation. Especially on the first or second day of the campaign. Experience shows that strong starts are correlated with strong finishes. Editor: Professor Rod O’Donnell, University of Technology Sydney, Australia. Contact:  [email protected] See also https://www.uts.edu.au/staff/rod.odonnell

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by Felipe Rezende This is the first in a series of blog posts on the Brazilian crisis. Part I A consensus has emerged in Brazil (and elsewhere) blaming Rousseff’s “new economic matrix” policies for the country’s worst crisis since the Great Depression (see here, here, here, here, and here). With the introduction of policy stimulus through ad hoc tax breaks for selected sectors seen as failing to boost economic activity and the deterioration of the fiscal balance — which posted a public sector primary budget deficit in 2014 after fifteen years of primary fiscal surpluses — opponents argued that government intervention was the problem. It provided the basis for the opposition to demand the return of the old neoliberal macroeconomic policy tripod and fiscal austerity policies. There was virtually a consensus that spending cuts would create confidence, reduce interest rates, and stimulate private investment spending. Fiscal austerity, according to this view, would be expansionary and pave the way for economic growth. However, there is an alternative interpretation of the Brazilian crisis: as the result of endogenous processes that created destabilizing forces, reducing margins of safety and increasing financial fragility. As Minsky put it, “stability is destabilizing.” The success of traditional stabilization policies over substantial periods has created endemic financial fragility and rising domestic and external private indebtedness, causing the deterioration… Read More

by Abhishek Anand and Lekha Chakraborty [1] The global market was eagerly waiting for the July Monetary Policy Statement of the Bank of England (BoE). Speculation was rife that, post Brexit, the BoE would become the latest entrant into the set of central banks experimenting with negative interest rate policy (NIRP) in a desperate bid to reinvigorate its economy. Remember that the global financial markets were shaken after the referendum result and the pound plunged to a three-decade low. The BoE governor Mark Carney had to step in with a pledge to provide $345 billion for the financial system of the country. He also issued a statement that “the BoE has put in place extensive contingency plans” to deal with a “period of uncertainty and adjustment.” Analysts had their own predictions regarding the BoE’s possible monetary policy stance. JPMorgan Chase & Co., Goldman Sachs, and ING Bank were of the opinion that the BoE could lower its key interest rate in its July meeting. The result of a Bloomberg survey showed that in the event of Brexit, credit-easing measures such as quantitative easing (QE) and rate cuts may be the immediate options resorted to. The global importance of Brexit could be gauged from the fact that the Fed has had to delay to the fourth quarter of this year its plan of a… Read More

A new book edited by Michael Jacobs and Mariana Mazzucato and featuring contributions from Joseph Stiglitz, L. Randall Wray, Stephanie Kelton, and others will be released tomorrow: The TOC is below: You can download the introductory chapter here (pdf).