Summary Vol. 24, No. 3 | October 2015

Summary Fall 2015

This issue includes the two most recent strategic analyses, for Greece and the United States. The Levy Institute Macro Modeling Team argues that Greece cannot return to economic growth under austerity. The strategic analysis of the US economy follows, and shows that economic growth could easily be undermined by such things as a rising dollar, fiscal austerity, and deepening income inequality. A policy note offers arguments for a pragmatic debt reduction and reconstruction plan for Greece following the historical example of the Marshall Plan in Germany. Two policy notes take up the issue of inequality in the United States. The first examines the distribution of income in the postwar period and the second examines trends in real wages by demographic characteristics. Drawing on the work of Distinguished Scholar Wynne Godley, a nonbehavioral theory of savings is proposed to explain recent developments in the US economy and the challenges it faces going forward. A discussion of the lack of capital development in the increasingly financialized economies of the United States and the UK provides prescriptions for sustainable, inclusive growth.

Turning to the ongoing crisis in Europe, this issue offers a perspective on Germany’s insistence on austerity as a strategy to advance political integration. A new paper analyzes the impact of a euro exit on trade, growth, employment, and wages in light of the historical experience of currency devaluations. And a Euro Treasury, as a means to repair a basic flaw in the euro and support growth, is proposed. The issue also includes several discussions of clearing unions using local currencies to address deficiencies in the current financial system for emerging economies. Further examining the experience in the emerging BRICs economies, John Maynard Keynes’s observations on the relationship between short- and long-term interest rates is confirmed in an analysis of India’s government bond yields. Wage inequality trends in Bolivia are also analyzed in a working paper.

Contributing to our historical understanding of the origins of money, a new paper explores the historical development of class society and money in the ancient societies of Greece and Egypt. The inclusion of unpaid forms of work currently excluded from satellite accounts is reviewed and found to be an obstacle to accurate analysis and sound policy development. The issue concludes with a study that offers both a methodological contribution and substantive guidance for policies and programs aimed at improving the health of children and families.


Program: The State of the US and World Economies

Strategic Analysis

  • DIMITRI B. PAPADIMITRIOU, MICHALIS NIKIFOROS, and GENNARO ZEZZA, Greece: Conditions and Strategies for Economic Recovery
  • DIMITRI B. PAPADIMITRIOU, GREG HANNSGEN, MICHALIS NIKIFOROS, and GENNARO ZEZZA, Fiscal Austerity, Dollar Appreciation, and Maldistribution Will Derail the US Economy
  • SUNANDA SEN, The BRICS Initiatives in the Current Global Conjuncture: An Assessment in the Context of the IMF Rulings for Greece
  • PAVLINA R. TCHERNEVA, When a Rising Tide Sinks Most Boats: Trends in US Income Inequality
  • MICHALIS NIKIFOROS, A Nonbehavioral Theory of Saving
  • JÖRG BIBOW, Making the Euro Viable: The Euro Treasury Plan
  • RICCARDO REALFONZO and ANGELANTONIO VISCIONE, The Effects of a Euro Exit on Growth, Employment, and Wages

Program: Monetary Policy and Financial Structure

  • JAN KREGEL, Emerging Market Economies and the Reform of the International Financial Architecture: Back to the Future; Emerging Markets and the International Financial Architecture: A Blueprint for Reform
  • JAN KREGEL, Europe at the Crossroads: Financial Fragility and the Survival of the Single Currency
  • GREG HANNSGEN and TAI YOUNG-TAFT, Inside Money in a Kaldor-Kalecki-Steindl Fiscal Policy Model: The Unit of Account, Inflation, Leverage, and Financial Fragility
  • MARIANA MAZZUCATO and L. RANDALL WRAY, Financing the Capital Development of the Economy: A Keynes-Schumpeter-Minsky Synthesis
  • TANWEER AKRAM and ANUPAM DAS, Does Keynesian Theory Explain Indian Government Bond Yields?
  • ALLA SEMENOVA and L. RANDALL WRAY, The Rise of Money and Class Society: The Contributions of John F. Henry

Program: The Distribution of Income and Wealth

  • FERNANDO RIOS-AVILA, A Decade of Declining Wages: From Bad to Worse
  • GUSTAVO CANAVIRE-BACARREZA and FERNANDO RIOS-AVILA, On the Determinants of Changes in Wage Inequality in Bolivia

Program: Economic Policy in the 21st Century

Explorations in Theory and Empirical Analysis

  • TAI YOUNG-TAFT, Marx’s Theory of Money and 21st-century Macrodynamics
  • TAMAR KHITARISHVILI, FERNANDO RIOS-AVILA, and KIJONG KIM, Direct Estimates of Food and Eating Production Function Parameters for 2004–12 Using an ATUS/CE Synthetic Dataset


  • New Scholars
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Upcoming Event

  • Gender and Macroeconomics Conference

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  • Publications and Presentations by Levy Institute Scholars


Jonathan Hubschman

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