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Working Paper No. 1076February 07, 2025
The Rise of the Modern Monetary System
AbstractThis working paper integrates the credit money approach (associated with Post Keynesian endogenous money theory) with the state money approach (associated with Modern Money Theory) by drawing on Wray’s 1990…more
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Working Paper No. 1075January 23, 2025
The High Cost of the Strong Peso and Its Temporary Nature: The Case of Mexico
AbstractThe 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…more
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Working Paper No. 1074December 24, 2024
Political Conflict, Green Capabilities, and Growth Patterns in a Kaleckian Small Open Economy
AbstractThe paper presents a Kaleckian extended model exploring sustainable development, defined as growth that is economically stable, socially inclusive, and environmentally respectful. The model links CO2 emission trends with public…more
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Working Paper No. 1073December 18, 2024
Frankenstein in Fact and Fiction
AbstractThis paper is based on remarks delivered at the EDI Keynote Lecture at Bard College, November 19th, 2024: ‘Frankenstein in Fact and Fiction.’ View a recording of the lecture on YouTube….more
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Working Paper No. 1072December 12, 2024
Macro-Financial Models of Canadian Dollar Interest Rate Swap Yields
AbstractThis 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…more
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Working Paper No. 1071December 10, 2024
Tilting at Windmills
AbstractOriginally 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…more
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Working Paper No. 1070December 10, 2024
Notes on Money as Technology
AbstractOriginally 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…more
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Working Paper No. 1069December 10, 2024
Tax Credits Are Industrial Policy
AbstractOriginally 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…more
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Working Paper No. 1068December 10, 2024
Monetary Power and Vulnerability to Sovereign Debt Crises
AbstractOriginally 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,…more
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Working Paper No. 1067December 06, 2024
Revisiting the Foreign Debt Problem and the “External Constraint” in the Periphery
AbstractOriginally 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…more
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Working Paper No. 1066December 06, 2024
Job Guarantee Program and the Kaleckian Dilemma
AbstractOriginally issued as EDI Working Paper No. 10, November 2023 Minsky (1965) has presented the Job Guarantee program as a recommendation in the war against unemployment and poverty. Kalecki (1943),…more
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Working Paper No. 1065December 06, 2024
Resource Constraints and Economic Policy
AbstractOriginally 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…more
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Working Paper No. 1064December 06, 2024
Seismic Shifts in Economic Theory and Policy from the Bernanke Doctrine to Modern Money Theory
AbstractOriginally 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…more
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Working Paper No. 1063December 03, 2024
Fiscal and Monetary Policy in an SFC Model of the Italian Economy
AbstractFollowing the Great Financial Crisis of 2008–9, there has been a shift in mainstream economic policy modeling toward “realism,” with dynamic stochastic general equilibrium (DSGE) models partly diverging from the…more
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Working Paper No. 1062December 03, 2024
The Value of Money
AbstractThis 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…more
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Working Paper No. 1061November 26, 2024
Modern Money Theory on Fiscal and Monetary Policies
AbstractOriginally issued as EDI Working Paper No. 04, 2022 Drumetz and Pfister make several claims about the inadequacy and fallacies of Modern Money Theory (MMT) and conclude that MMT is…more
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Working Paper No. 1060November 26, 2024
The Job Guarantee
AbstractOriginally issued as EDI Working Paper No. 02, 2022 Orthodox economic theory presents the policy maker with an impossible choice: eradicate unemployment at the cost of undesirable inflation or keep…more
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Working Paper No. 1059November 26, 2024
Three Lessons from Government Spending and the Post-Pandemic Recovery
AbstractOriginally issued as EDI Working Paper No. 01, 2021 The central lesson of the COVID-19 fiscal response is that money is not scarce. Without delay, governments around the world appropriated…more
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Working Paper No. 1058November 20, 2024
The Origins of the Platonic Approach to Monetary Systems
AbstractA 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…more
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Policy NotesNovember 07, 2024
Trump Wins While Americans Vote for Progressive Policies
AbstractOn November 5, 2024, American voters sent Donald Trump back to the White House. In 2020, he lost his bid for reelection to Joe Biden, after winning in 2016 against…more
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Strategic AnalysisNovember 05, 2024
Economic Challenges of the New U.S. Administration
AbstractOn the eve of the 2024 US presidential election, the authors share their latest macroeconomic projections using the Levy Institute’s tailored stock-flow consistent model and evaluate two alternative policy scenarios, depending upon the next occupant of the White House: (1) a significant increase in import tariffs and decrease in the marginal tax rate, and (2) a substantial increase in government expenditure paired with an increase in the marginal tax rate.
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Policy NotesNovember 04, 2024
Inflation
AbstractEdward Lane surveys some of the main potential contributors to the recent period of elevated inflation rates in the US economy—focusing on supply disruptions, inflation-adjusted consumer spending, and consumer spending…more
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Policy Notes No. 1October 11, 2024
The Boy Who Cried Wolf About Government Debt
AbstractIn a New York Times editorial, David Leonhardt recounts Aesop’s apocryphal story about the boy and the wolf, warning that while deficit hawks have so far been wrong, the growing government debt will eventually bite. He reports the economic plans of both presidential candidates would add to the debt that will soon exceed GDP and grow to 130 percent of annual output under a President Harris, or 140 percent with a Trump presidency.
The story of the boy and the wolf was a fable, although it was within the realm of possibility. The fable of the debt wolf is not. While there are real world wolves—Leonhardt mentions climate catastrophe and autocratic leaders, and the authors would add rising inequality and the concentration of economic and political power in the hands of billionaires—authors Yeva Nersisyan and L. Randall Wray assert, federal debt is not one of them.
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Working Paper No. 1057October 09, 2024
Rise and Fall of Mexican Super Peso: Heterodox Perspective versus Orthodoxy
AbstractThis 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…more
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