Publications

588 publications found, searching for 'Monetary Policy and Financial Structure '

• Working Paper No. 1075 January 23, 2025

  The High Cost of the Strong Peso and Its Temporary Nature: The Case of Mexico

  Arturo Huerta G.
  Abstract

  The article analyzes why exchange rate stability has been prioritized in Mexico and why the national currency has appreciated; which policies and factors have made this possible, the costs and consequences of the strong peso, and its sustainability and temporality are also examined. Mexico’s economy does not have the endogenous conditions necessary to maintain such […]

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• Working Paper No. 1072 December 12, 2024

  Macro-Financial Models of Canadian Dollar Interest Rate Swap Yields

  Tanweer Akram, and Khawaja Mamun
  Abstract

  This paper analyzes the dynamics of Canadian dollar–denominated (CAD) interest rate swap yields. It applies autoregressive distributive lag (ARDL) models, using monthly time series data, to estimate the effects of the current short-term interest rate and other relevant macro-financial variables on interest rate swap yields. It shows that the current short-term interest rate is a […]

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• Working Paper No. 1071 December 10, 2024

  Tilting at Windmills

  James K. Galbraith, and Pavlina R. Tcherneva
  Abstract

  Originally issued as EDI Working Paper No. 14, May 2023 The Central Bank of the United States, the Federal Reserve, has a dual mandate to maintain both full employment and price stability. However, inflation-fighting had always eclipsed the full employment objective without much accountability. Today, the Federal Reserve provides regular testimony before Congress on how […]

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• Working Paper No. 1070 December 10, 2024

  Notes on Money as Technology

  Raúl A. Carrillo
  Abstract

  Originally issued as EDI Working Paper No. 20, June 2024 Scholars and affiliates of the Levy Economics Institute have long demonstrated a granular understanding of the “operations” of money, which entails understanding the financial system’s law and technology (Grey 2019, Tymoigne 2014, Fullwiler 2010, Bell and Wray 2002-3, Bell 2000). During the dot-com bubble, many […]

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• Working Paper No. 1069 December 10, 2024

  Tax Credits Are Industrial Policy

  Chirag Lala
  Abstract

  Originally issued as EDI Working Paper No. 19, March 2024 The Inflation Reduction Act (IRA) is criticized for “derisking” private investment by increasing the gains to private firms. The derisking critique argues that the IRA insufficiently disciplines private firms; it does not utilize legal or financial penalties which would force firms to undertake green investment […]

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• Working Paper No. 1068 December 10, 2024

  Monetary Power and Vulnerability to Sovereign Debt Crises

  Karina Lima
  Abstract

  Originally issued as EDI Working Paper No. 17, March 2024 This paper challenges the prevailing view in the sovereign debt literature by arguing that sovereign debt markets, in many respects, behave similarly to other credit markets. These markets are hierarchical rather than flat, inherently hybrid in nature, blending elements of public order and private markets, […]

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• Working Paper No. 1067 December 06, 2024

  Revisiting the Foreign Debt Problem and the “External Constraint” in the Periphery

  Ndongo Samba Sylla
  Abstract

  Originally issued as EDI Working Paper No. 16, March 2024 Most debates and policy proposals about Global South countries’ external debt problem take for granted the view that it is normal for their governments to issue debts denominated in foreign currencies. This paper tries to challenge this widely held and usually unquestioned assumption by relying […]

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• Working Paper No. 1065 December 06, 2024

  Resource Constraints and Economic Policy

  Yeva Nersisyan
  Abstract

  Originally issued as EDI Working Paper No. 09, 2023 This paper explains the MMT approach for evaluating the affordability of spending programs, contrasting it with the mainstream approach. Using the examples of the Green New Deal, Medicare-for-All, and Build Back Better, it argues that rethinking spending and taxes as claims on, and releases of resources, […]

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• Working Paper No. 1064 December 06, 2024

  Seismic Shifts in Economic Theory and Policy from the Bernanke Doctrine to Modern Money Theory

  Pavlina R. Tcherneva, and Éric Tymoigne
  Abstract

  Originally issued as EDI Working Paper No. 08, 2022  This paper evaluates the relationship between monetary and fiscal policy and the relative effectiveness of macroeconomic stabilization through the lens of Modern Money Theory (MMT). We articulate previously-neglected aspects of monetary sovereignty to offer a new interpretation of the Bernanke Doctrine that emerged in the wake of […]

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• Working Paper No. 1062 December 03, 2024

  The Value of Money

  L. Randall Wray
  Abstract

  This paper examines heterodox theories of the determinants of the value of money. Orthodox approaches that tie money’s value to relative scarcity of money or to the price level are rejected as inconsistent with the monetary theory of production embraced by heterodox traditions linked to Marx, Veblen, and Keynes. This paper examines and integrates (1) […]

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• Working Paper No. 1058 November 20, 2024

  The Origins of the Platonic Approach to Monetary Systems

  Éric Tymoigne
  Abstract

  A monetary approach that combines Chartalism, Nominalism, and Command origins of monetary systems is often deemed to have emerged only recently, while the Aristotelian approach (Commodity, Metallism, and Market origins of monetary systems) is the only one that existed until the end of the eighteenth/early-nineteenth century. In the major studies of the history of monetary […]

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• Working Paper No. 1057 October 09, 2024

  Rise and Fall of Mexican Super Peso: Heterodox Perspective versus Orthodoxy

  Laura Lisset Montiel-Orozco
  Abstract

  This working paper contrasts the neo-Keynesian and post-Keynesian theories of monetary policy for an open economy, highlighting the irrelevance of the orthodox theory and the explanatory capacity of heterodoxy for an emerging economy such as Mexico. It focuses on the role of the central bank and the case of the Mexican currency during the economic […]

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• Working Paper No. 1055 September 18, 2024

  The Relation Between Budget Deficits and Growth: Complicated but Clear

  L. Randall Wray, and Eric Lin
  Abstract

  This paper looks at the relationship between government budget deficits and the growth rate of GDP. While orthodox economic theory offers several reasons to believe that growing deficits might be associated with slower growth, and would ultimately be unsustainable, Keynesians assert that deficits could stimulate growth—at least in the short run—implying the relation between deficits […]

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• Working Paper No. 1053 June 07, 2024

  Foreign Deficit and Economic Policy: The Case of Mexico

  Arturo Huerta G.
  Abstract

  The article analyzes Mexico under globalization, particularly on the free mobility of capital. It argues that globalization has detrimentally impacted the productive and external sectors, causing the economy to become excessively reliant on volatile capital inflows from abroad. The Mexican government—instead of undoing the structural problems that lead to external deficits—implements policies that resolve the […]

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• Working Paper No. 1051 May 10, 2024

  Euro Interest Rate Swap Yields: Some ARDL Models

  Tanweer Akram, and Khawaja Mamun
  Abstract

  This paper examines the dynamics of euro-denominated (EUR) long-term interest rate swap yields. It shows that the short-term interest rate has an economically and statistically significant effect on EUR swap yields of different maturity tenors, after controlling for various key macroeconomic variables. It presents several autoregressive distributive lag (ARDL) models of the dynamics of EUR […]

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• Working Paper No. 1050 May 07, 2024

  Macroeconomic Effects of a Government Overdraft on Its Central Bank Account

  Tarron Khemraj
  Abstract

  The Guyana government, from 2015 to 2021, accumulated a large overdraft on its central bank account. It owed this overdraft to a binding debt ceiling limit and fractious political environment that prevented an increase in the ceiling, allowing for the auctioning of Treasury bills to create the liquidity reflux necessary to refill the account. This […]

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• Working Paper No. 1048 April 19, 2024

  An Empirical Analysis of Swedish Government Bond Yields

  Tanweer Akram, and Mahima Yadav
  Abstract

  This paper econometrically models the dynamics of Swedish government bond (SGB) yields. It examines whether the short-term interest rate has a decisive influence on long-term SGB yields, after controlling for other macroeconomic and financial variables, such as consumer price inflation, the growth of industrial production, the stock price index, the exchange rate of the Swedish […]

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• Working Paper No. 1046 March 07, 2024

  The Aggregate Production Function and Solow’s “Three Denials”

  Jesus Felipe, and John McCombie
  Abstract

  This paper offers a retrospective view of the key pillar of Solow’s neoclassical growth model, namely the aggregate production function. We review how this tool came to life and how it has survived until today, despite three criticisms that undermined its raison d’être. They are the Cambridge Capital Theory Controversies, the Aggregation Problem, and the […]

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• Working Paper No. 1043 February 14, 2024

  Interest Rate Dynamics: An Examination of Mainstream and Keynesian Empirical Studies

  Tanweer Akram, and Khawaja Mamun
  Abstract

  This paper critically reviews both mainstream and Keynesian empirical studies of interest rate dynamics. It assesses the key findings of a selected number of these studies, surveying the debates between the mainstream and the Keynesian schools. It also explores the debates on interest rate dynamics within the Post Keynesian school of thought. Lastly, the paper […]

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• Working Paper No. 1035 January 04, 2024

  The Swedish Monetary System from a Balance Sheet Perspective

  Dirk Ehnts, and Jussi Ora
  Abstract

  In this paper, we discuss the balance sheet mechanics of the Swedish government. We examine spending, government bond purchases, and tax payments. As long as the Swedish central bank, which is created through Swedish laws, supports the Swedish central government, it cannot run out of money. The Swedish government therefore plays a large role in […]

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• Working Paper No. 1034 December 08, 2023

  Euro Interest Rate Swap Yields: A GARCH Analysis

  Tanweer Akram, and Khawaja Mamun
  Abstract

  This paper models the month-over-month change in euro-denominated (EUR) long-term interest rate swap yields. It shows that the change in the short-term interest rate has an economically and statistically significant effect on the change in EUR swap yields of different maturity tenors, after controlling for various macroeconomic and financial variables, such as the month-over-month change […]

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• Working Paper No. 1025 August 01, 2023

  Unconventional Monetary Policy or Automatic Stabilizers?

  Nitin Nair
  Abstract

  The purpose of public policy, expansionary or contractionary, is to encourage the expansion of income, output, and employment. Theory decides the nature and kind of policy, and the underlying mechanics that result in expansion. Keynes (1964) brings money and a monetary production economy to the forefront of economic analysis, yet in the General Theory, he […]

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• Working Paper No. 1024 July 26, 2023

  When Minsky and Godley Met Structuralism

  Nitin Nair
  Abstract

  Underdevelopment is often conceived as being reproduced domestically. This paper emphasizes the international forces that enable the persistence of underdevelopment. We first explore how the currency hierarchy imposes a dependency relation between developed and underdeveloped economies. We improvise and quantify the currency hierarchy using ratios from the consolidated sovereign balance sheet. Using the improvisation of […]

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• Policy Notes No. 3 July 24, 2023

  In Defense of Low Interest Rates

  James K. Galbraith
  Abstract

  In recalling John Maynard Keynes’s revolutionary theory of interest, reviewing the doctrines Keynes sought to overthrow, and analyzing the structural transformations of the US economy, James K. Galbraith maintains there is no alternative to a policy of low interest rates. However, such a policy cannot be effective, he argues, without a radical restructuring of the […]

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