Summary Vol. 29, No. 1 | January 2020

Summary Winter 2020

This issue of the Summary features L. Randall Wray’s written testimony submitted for a November 20, 2019 hearing before the US House of Representatives’ Budget Committee, where he urged a reexamination of the economic impact of public debt and deficits; prepared by Wray and Yeva Nersisyan, the testimony explains why federal deficits have become the norm in the context of the US economy, argues that they are not only necessary but useful, and advocates strengthening automatic fiscal stabilizers. A working paper, also by Wray, examines state and local government debt through the lens of Modern Money Theory and proposes a new understanding of how the fiscal space available at the federal level can be used to revitalize local economies.

In a related vein, this issue includes two working papers that are part of a series of empirical investigations uncovering evidence for the Keynesian view that the chief determinants of government bond yields are the decisions of monetary policymakers. Tanweer Akram and Huiqing Li inquire into the impact of Japan’s monetary policy on its government bond yields; Akram and Anupam Das extend their earlier work on the short-term interest rate’s influence over the long-term interest rate, this time employing daily data on changes in US Treasury security yields.

In a Research Project Report under the Levy Institute Measure of Time and Income Poverty (LIMTIP) program, Senior Scholar Ajit Zacharias, Research Scholars Thomas Masterson, Fernando Rios-Avila, Michalis Nikiforos, and Kijong Kim, and Research Associate Tamar Khitarishvili present the findings of their study on consumption and time poverty in Ghana and Tanzania, undertaken with the support of the William and Flora Hewlett Foundation.

A working paper under the Gender Equality and the Economy program by Srinivas Raghavendra, Research Scholar Kijong Kim, Sinead Ashe, Mrinal Chadha, Felix Asante, Petri T. Piiroinen, and Nata Duvvury puts forth the results of their study on the macroeconomic impacts of violence against women and girls in Ghana.

Also in this issue, Research Associate Jörg Bibow reviews the evolution of the international monetary and financial architecture against the background of John Maynard Keynes’s original Bretton Woods plan; Lorenzo Esposito and Giuseppe Mastromatteo argue that the faulty assumptions of a particular strand of mainstream theory played a key role in rendering economic systems more fragile; Research Associate Lekha Chakraborty reflects on the future of fiscal federalism in India; and Zengping He and Genliang Jia examine local government debt growth in China—tying it to increased concerns of a Chinese Minsky moment—and argue that the central government should play a more active role in relieving these local burdens.
Program: The State of the US and World Economies
  • TANWEER AKRAM and ANUPAM DAS, An Analysis of the Daily Changes in US Treasury Security Yields
Program: Monetary Policy and Financial Structure
  • L. RANDALL WRAY, Congressional Testimony
  • TANWEER AKRAM and HUIQING LI, The Impact of the Bank of Japan’s Monetary Policy on Japanese Government Bonds’ Low Nominal Yields
  • LEKHA S. CHAKRABORTY, Indian Fiscal Federalism at the Crossroads: Some Reflections
  • L. RANDALL WRAY, Fiscal Reform to Benefit State and Local Governments: The Modern Money Theory Approach
  • JÖRG BIBOW, Evolving International Monetary and Financial Architecture and the Development Challenge: A Liquidity Preference Theoretical Perspective
  • LORENZO ESPOSITO and GIUSEPPE MASTROMATTEO, Defaultnomics: Making Sense of the Barro-Ricardo Equivalence in a Financialized World
  • ZENGPING HE and GENLIANG JIA, Rethinking China’s Local Government Debt in the Frame of Modern Money Theory
Program: The Levy Institute Measure of Time and Income Poverty
  • AJIT ZACHARIAS, THOMAS MASTERSON, FERNANDO RIOS-AVILA, MICHALIS NIKIFOROS, KIJONG KIM, and TAMAR KHITARISHVILI, Macroeconomic and Microeconomic Impacts of Improving Physical and Social Infrastructure: A Macro-Micro Policy Model for Ghana and Tanzania
Program: Gender Equality and the Economy
  • SRINIVAS RAGHAVENDRA, KIJONG KIM, SINEAD ASHE, MRINAL CHADHA, FELIX ASANTE, PETRI T. PIIROINEN, and NATA DUVVURY, The Macroeconomic Loss Due to Violence against Women and Girls: The Case of Ghana
  • 29th Annual Hyman P. Minsky Conference
  • The Hyman P. Minsky Summer Seminar
  • Intensive Course in Gender-Sensitive Macroeconomic Modeling for Policy Analysis
  • New Research Fellow
Elizabeth Dunn Michael Stephens

Publication Highlight

Research Project Reports
The Macroeconomic Effects of Student Debt Cancellation
Author(s): Scott Fullwiler, Stephanie A. Kelton, Catherine Ruetschlin, Marshall Steinbaum
February 2018

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