Levy Economics Institute Newsletter
Levy Economics Institute of Bard College
May 19, 2016
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Minsky Conference Video Now Online

Video proceedings of the 25th Annual Hyman P. Minsky Conference are now available on YouTube: presentations by Vítor Constâncio, Barney Frank, Jan Kregel, Stephanie Kelton, Henry Kaufman, L. Randall Wray, more. Click here for the complete playlist.
New Publications
Michalis Nikiforos Dimitri B. Papadimitriou Gennaro Zezza Working Paper No. 867, May 2016
The Greek Public Debt Problem
Research Scholar Michalis Nikiforos, President Dimitri B. Papadimitriou, and Research Scholar Gennaro Zezza offer an analysis of the origins and consequences of the Greek and European economic crisis and suggest a path forward drawing upon lessons learned from the debt relief Germany received following World War II. They observe that the need for a change in policy direction remains urgent, as the austerity policies of the past six years have failed to restore Greece to economic growth and structural imbalances continue to hamper a sustainable economic future for the eurozone. The authors recommend a bold restructuring of Greece’ s debt, arguing that repayment is both impractical and morally indefensible, broadly following the example of the Allies’ forgiveness of German debt. Likewise, they call for Europe to relax austerity policies and take up the task of addressing the structural imbalances of the eurozone as a whole.

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Working Paper No. 866, May 2016
Working Paper No. 866, May 2016
Going Forward from B to A? Proposals for the Eurozone Crisis
Warren Mosler, Damiano B. Silipo, Dimitri B. Papadimitriou, and Gennaro Zezza

Massimo Amato and Luca Fantacci, Università Bocconi, President Dimitri B. Papadimitriou, and Research Scholar Gennaro Zezza explore the introduction of fiscal currency (i.e., decidedly not legal tender) as a means to restore fiscal space to peripheral countries, such has Greece, that have adopted austerity policies in order to meet their commitments to the European institutions and the International Monetary Fund. The authors analyze the precursors of both the European debt crisis and stagnation in the eurozone periphery, which have stoked debate about how best to reform the eurozone’ s governing institutions. They discuss the possibility of introducing a domestic fiscal currency in a manner that is compatible with retaining the euro as the official currency and enabling revisions to the European Central Bank’ s TARGET2 payments system to foster a more robust monetary architecture. Countries in need of employment and investment growth could then use fiscal currency to finance these efforts. In addition, the authors observe that charging interest on TARGET2 surplus balances would create incentives for countries with large surpluses to increase domestic demand and thus support recovery throughout the eurozone.

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Rania Antonopoulos Valeria Esquivel Thomas Masterson Ajit Zacharias Working Paper No. 865, May 2016
Measuring Poverty in the Case of Buenos Aires: Why Time Deficits Matter
Rania Antonopoulos, Valeria Esquivel, Thomas Masterson, and Ajit Zacharias

Senior Scholar Rania Antonopoulos, Research Associate Valeria Esquivel, Research Scholar Thomas Masterson, and Senior Scholar Ajit Zacharias present their estimates of the Levy Institute Measure of Time and Income Poverty (LIMTIP) for Argentina. Their analysis reveals large numbers of “hidden poor” (i.e., people who are not included in the official poverty statistics but are identified as poor using a time-adjusted poverty line). The authors note that significant time deficits affecting people living just above the poverty line explain the higher level of poverty, and that these deficits are unequally distributed by employment status, household type, and gender. They include the results of a simulation of the impact of full-time employment on people without wage jobs and find that the added time deficits erode much of the expected gains in reducing poverty. Thus, they conclude that policy interventions must address both time and income poverty to avoid unintentionally impoverishing the very groups they are intended to help.

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Media and Web Coverage

In an interview with Bloomberg’s Joe Weisenthal, Senior Scholar L. Randall Wray discusses Donald Trump’s recent comments about printing money to relieve the national debt, and whether fears of hyperinflation are warranted. Video of the interview is available here.

Wray weighs in on Republican frontrunner Donald Trump ’ s about-face on the relevance of a ballooning US debt. Trump has advocated for the federal government to take advantage of cheap interest rates by boosting spending on initiatives such as rebuilding infrastructure—a position shared by traditional Keynesian economists and skewered by budget hawks. Calling this a “Nixon-goes-to-China moment,” Wray says he expects Trump will continue a two-pronged theme of advocating for jobs and wage increases, while calming fears about the resulting deficits.

A recent strategic analysis of the US economy by the Levy Institute finds that 90 percent of US households were worse off financially in 2015 than at any time since the early 1970s. Ninety-nine percent have seen their net worth fall since 2007—the result of income stagnation and the plunge in housing values during the Great Recession—while real incomes of the top 1 percent rebounded over the same period, reaching near-record highs.
         
In This Issue
Minsky Conference on YouTube
The Greek Public Debt Problem
Going Forward from B to A?
Measuring Poverty in the Case of Buenos Aires
Media and Web Coverage
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