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Working Paper No. 555Financial Stability: The Significance and Distinctiveness of Islamic Banking in Malaysia
January 27, 2009 This paper explores the significance of Islamic banking in Malaysia for stability in the country’s economy as a whole. Neither conventional theory nor Islamic economics puts forward a systematic explanation...more Publication -
Working Paper No. 554
Macroeconomic Imbalances in the United States and Their Impact on the International Financial System
January 26, 2009 The argument put forward in this paper is twofold. First, the financial crisis of 2007–08 was made global by the current account deficit in the United States; and second, there...more Publication -
Policy Note No. 1Obama’s Job Creation Promise
January 22, 2009 Job creation is once again at the forefront of policy action, and for advocates of pro-employment policies, President Obama’s Keynesian bent is a most welcome change. However, there are concerns...more Publication -
Strategic AnalysisFlow of Funds Figures Show the Largest Drop in Household Borrowing in the Last 40 Years
January 06, 2009 The Federal Reserve’s latest flow-of-funds data reveal that household borrowing has fallen sharply lower, bringing about a reversal of the upward trend in household debt. According to the Levy Institute’s...more Publication -
Strategic Analysis
Prospects for the United States and the World: A Crisis That Conventional Remedies Cannot Resolve
December 24, 2008 The economic recovery plans currently under consideration by the United States and many other countries seem to be concentrated on the possibility of using expansionary fiscal and monetary policies alone....more Publication -
Working Paper No. 553
Insuring Against Private Capital Flows
December 22, 2008 Following an analysis of the forces behind the “global capital flows paradox” observed in the era of advancing financial globalization, this paper sets out to investigate the opportunity costs of...more Publication -
Working Paper No. 552
Hypothetical Integration in a Social Accounting Matrix and Fixed-price Multiplier Analysis
December 16, 2008 This study proposes a simple modification to a Social Accounting Matrix (SAM) in order to analyze the multiplier effects of a new sector. A different input composition, or technology, of...more Publication -
Working Paper No. 551
Small Is Beautiful
December 02, 2008 This paper examines the relationship between farm size and yield per acre in Turkey using heretofore untapped data from a 2002 farm-level survey of 5,003 rural households. After controlling for...more Publication -
Working Paper No. 550
An Empirical Analysis of Gender Bias in Education Spending in Paraguay
November 20, 2008 Gender affects household spending in two areas that have been widely studied in the literature. One strand documents that greater female bargaining power within households results in a variety of...more Publication -
Working Paper No. 549
Excess Capital and Liquidity Management
November 14, 2008 These notes present a new approach to corporate finance, one in which financing is not determined by prospective income streams but by financing opportunities, liquidity considerations, and prospective capital gains....more Publication -
Policy Note No. 6
Time to Bail Out: Alternatives to the Bush-Paulson Plan
November 11, 2008 While serving as chairman of the Federal Reserve Board, Alan Greenspan advocated unsupervised securitization, subprime lending, option ARMs, credit-default swaps, and all manner of financial alchemy in the belief that...more Publication -
Working Paper No. 548
On Democratizing Financial Turmoil
November 10, 2008 The paper uses Minsky’s financial instability hypothesis as an analytical framework for understanding the subprime mortgage crisis and for introducing adequate reforms to restore economic stability. We argue that the...more Publication -
Policy Note No. 5
Will the Paulson Bailout Produce the Basis for Another Minsky Moment?
October 24, 2008 As the House Committee on Financial Services meets to hear the expert testimony of witnesses concerning the regulation of the financial system, the measures that have been introduced to support...more Publication -
Working Paper No. 547
Minsky and Economic Policy
October 23, 2008 Recently, national newspapers all over the world have suggested that we should reread John Maynard Keynes, and that Hyman P. Minsky provides a valuable framework for understanding the world in...more Publication -
Working Paper No. 546
Do the Innovations in a Monetary VAR Have Finite Variances?
October 20, 2008 Since Christopher Sims’s “Macroeconomics and Reality” (1980), macroeconomists have used structural VARs, or vector autoregressions, for policy analysis. Constructing the impulse-response functions and variance decompositions that are central to this...more Publication -
Policy Note No. 4
A Simple Proposal to Resolve the Disruption of Counterparty Risk in Short-Term Credit Markets
October 08, 2008 The impaired risk assessment caused by the collapse of mortgage-backed securities is the major problem threatening the stability of the American financial system, yet it is not clear that removing...more Publication -
Public Policy Brief No. 96The Commodities Market Bubble
October 08, 2008 Money manager capitalism—characterized by highly leveraged funds seeking maximum returns in an environment that systematically underprices risk—has resulted in a series of boom-and-bust cycles in equities, real estate, and commodities....more Publication -
Working Paper No. 545
Promoting Equality Through an Employment of Last Resort Policy
October 07, 2008 Unemployment has far-reaching effects, all leading to an inequitable distribution of well-being. To put an economy on an equitable growth path, economic development must be based on social efficiency, equity—and...more Publication -
Working Paper No. 544
Inflation Targeting in Brazil
September 29, 2008 The monetary policy regime of inflation targeting (IT) has been adopted by a significant number of emerging economies. While the focus of this paper is on Brazil, which began inflation...more Publication -
Working Paper No. 543
Macroeconomics Meets Hyman P. Minsky
September 01, 2008 Expanding on an approach developed by financial economist Hyman Minsky, the authors present an alternative to the standard “efficient markets hypothesis”—the relevance of which Minsky vehemently denied. Minsky recognized that,...more Publication -
Public Policy Brief No. 95
Shaky Foundations: Policy Lessons from America’s Historic Housing Crash
August 29, 2008 A bursting asset bubble inevitably requires central bank action, usually when it is already too late and with adverse spillover effects. In this sense, the Federal Reserve and other central...more Publication -
Policy Note
What’s a Central Bank to Do?
August 25, 2008 As homeowner equity continues to disappear, there is a growing consensus that losses on all mortgages will exceed $1 trillion, with financial losses spreading far beyond real estate. Mortgage rates...more Publication -
Policy Note No. 3
What’s a Central Bank to Do?
August 25, 2008 As homeowner equity continues to disappear, there is a growing consensus that losses on all mortgages will exceed $1 trillion, with financial losses spreading far beyond real estate. Mortgage rates...more Publication -
Working Paper No. 542
Keynes’s Approach to Full Employment
August 07, 2008 This paper argues that John Maynard Keynes had a targeted (as contrasted with aggregate) demand approach to full employment. Modern policies, which aim to “close the demand gap,” are inconsistent...more Publication