Levy Economics Institute Newsletter
Levy Economics Institute of Bard College
March 7, 2016
Upcoming Event
25th Annual Hyman P. Minsky Conference
April 12–13, 2016
25th Annual Hyman P. Minsky Conference
Will the Global Economic Environment Constrain US Growth and Employment?
Levy Economics Institute of Bard College
Annandale-on-Hudson, N.Y.

The Levy Institute’s 25th Annual Minsky Conference will take place at Blithewood, on the Bard College campus, in April 2016. Organized with underwriting support from the Ford Foundation, the conference will address whether what appears to be a global economic slowdown will jeopardize the implementation and efficiency of Dodd-Frank regulatory reforms, the transition of monetary policy away from zero interest rates, and the “new” normal for fiscal policy, as well as the use of fiscal policies aimed at achieving sustainable growth and full employment. For a full list of speakers and online registration, click here.
New Publications
Dimitri B. Papadimitriou Michalis Nikiforos Gennaro Zezza Strategic Analysis, March 2016
Destabilizing an Unstable Economy
Levy President Dimitri B. Papadimitriou and Research Scholars Michalis Nikiforos and Gennaro Zezza examine the medium-term prospects for the US economy in this new Strategic Analysis. Their analysis reveals that the US economy remains fragile due to three persistent structural issues: weak demand for US exports, fiscal conservatism, and a four-decade trend in rising income inequality. It also faces risk from stagnation in the economies of the main US trading partners, appreciation of the dollar, and/or a contraction in asset prices. The authors provide a baseline and three alternative scenarios using the Levy Institute’s stock-flow consistent macro model (a dollar appreciation and reduced growth in US trading partners scenario; a stock market correction scenario; and a third scenario combining scenarios 1 and 2). The baseline scenario shows that future growth will depend on an increase in private sector indebtedness, while the remaining scenarios underscore the linkages between a fragile US recovery and instability in the global economy.

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e-pamphlet, January 2016

Jordan Brennan, Unifor and the Canadian Centre for Policy Alternatives, examines the rise of income inequality and the deceleration of economic growth in the United States. The first section of this two-part analysis examines the consolidation of corporate power, through mergers and acquisitions, between 1895 and 2013, and finds that reduced competition, declines in fixed asset investment, and the rise of practices such as stock buybacks have shifted investment away from the real economy, leading to weak economic growth and rising income inequality. The second part of his analysis examines the interplay of labor unions, inflation, and income inequality. Brennan observes that the decline of unions as a countervailing force to corporate power and anti-inflationary monetary policy have shifted income away from middle- and lower-income groups. Similarly, he observes that over the past century inflation has tended to redistribute income from capital to labor—from the upper to the lower income strata. In this context, anti-inflation policy is arguably a use of state power to effect a regressive redistribution of income.

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Pavlina R. Tcherneva
Working Paper No. 861, March 2016
Money, Power, and Monetary Regimes
Pavlina R. Tcherneva

Research Associate Pavlina R. Tcherneva explores money as a power relationship—a stratified social debt relationship measured in a unit of account issued by an authority, such as a sovereign state. She finds that money is a social mechanism for redistribution that predates markets and real exchanges. The author provides a brief overview of the history of money, beginning with some of its earliest forms and uses. She then discusses modern money and the additional roles that taxes assume, the dynamics at work in the creation of new currency, the relationship between monetary and political sovereignty, and what counterfeiting tells us about the nature of money. Tcherneva also examines the spectrum of modern monetary regimes (e.g., freely floating currencies, currency pegs, currency boards, dollarization, and monetary unions) and analyzes their implications for pursuing domestic policy priorities. She concludes that without an accurate picture of the origins, role, and functions of money, our understanding of the domestic policy space we confront will remain incomplete.

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Fernando J. Cardim de Carvalho
Working Paper No. 860, February 2016
Looking Into the Abyss? Brazil at the Mid-2010s
Fernando J. Cardim de Carvalho

Senior Scholar Fernando J. Cardim de Carvalho surveys the current conditions and antecedents of a slowing Brazilian economy and the rise of domestic inflation. Brazil’s economy, he explains, is likely to contract further in 2016, as unemployment tends to lag economic contractions. He notes that some observers argue that the current Brazilian economy is a result of past policy mistakes, while others insist that recent austerity policies are to blame. Cardim de Carvalho reviews both sides of this debate in detail, and provides a broader historical context for understanding the origins of the current political and economic crises. He suggests that a combination of boosting public sector and foreign investment while maintaining the current devaluation of the Brazilian real appears to be the most plausible path forward. However, until the paralysis gripping Brazilian policymakers is overcome, the country has little hope of developing a cooperative strategy and adopting policies to address the fragile state of its economy.

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Media and Web Coverage

In this broadcast interview, Reuters’s Ameera David talks to Research Associate Marshall Auerback about European growth, Brexit, and negative rates. (Interview begins at 4:45.)

Nick Johnson reviews Senior Scholar L. Randall Wray’s “excellent account of Minsky’s main contributions to economic thought.”
         
In This Issue
25th Annual Hyman P. Minsky Conference
Destabilizing an Unstable Economy
Rising Corporate Concentration, Declining Trade Union Power, and the Growing Income Gap
Money, Power, and Monetary Regimes
Looking Into the Abyss?
Media and Web Coverage
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