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BlogConsequences of a Eurozone Breakup, German Edition
September 01, 2011 Conversations surrounding eurozone disintegration have largely focused on the prospect of Greece making its exit, but the publication of this Hans-Olaf Henkel op-ed in the Financial Times puts the possibility of a German departure front and center. For an analysis of the consequences should Germany revert to a national currency, see this Levy Institute policy [...] Blog -
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Stimulus funds, pens, and socks: where do they go?
August 31, 2011 All to the same place? You might be excused for thinking so after perusing Tyler Cowen’s post Why didn’t the stimulus create more jobs?, but you would be wrong. First let’s look at Cowen’s post for some obvious red flags. About the number of people hired using stimulus funds who were already employed, Cowen says: [...] Blog -
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A Just-So Story About Money
August 31, 2011 From an intriguing interview with David Graeber, author of Debt: The First 5,000 Years, regarding the history of money and debt: Yes there’s a standard story we’re all taught… It really deserves no other introduction: according to this theory all transactions were by barter. “Tell you what, I’ll give you twenty chickens for that cow.” [...] Blog -
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Who Needs Free Lunch Anyway?
August 30, 2011 There appears to be a standoff brewing over renewal of the federal gas tax. The tax traditionally funds highway infrastructure projects and is due to be extended September 30th. But a group in Congress, led by Senator Tom Coburn, is maneuvering to block the extension. A delay of just ten days, Ron Klain writes in [...] Blog -
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How many Social Security checks fit inside one tax break?
August 30, 2011 The Congressional deficit reduction committee has numerous government programs on the chopping block, and we may soon see some very severe spending reductions. The committee must agree upon, and Congress must pass, $1.2 trillion in spending cuts and/or tax increases by November 23, or automatic, across-the-board spending cuts will go into effect in 2013. I [...] Blog -
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Automatic Stabilizer Fail
August 26, 2011 If you believe the US political system is incapable of handling counter-cyclical policy and that we need to rely on automatic stabilizers, this CBPP graph is depressing: In other words, Temporary Assistance for Needy Families (the result of the 1996 “welfare reform”), for whatever its other merits might be, has not been particularly sensitive to [...] Blog -
Public Policy Brief No. 119The Contradictions of Export-led Growth
August 25, 2011 The export-led growth paradigm is a development strategy aimed at growing productive capacity by focusing on foreign markets. It rose to prominence in the late 1970s and became part of...more Publication -
Public Policy Brief No. 119
Οι αντιφάσεις της εξαγωγικής ανάπτυξης
August 25, 2011 Το μοντέλο της εξαγωγικής ανάπτυξης είναι μια αναπτυξιακή στρατηγική που στοχεύει σε αυξανόμενη παραγωγική ικανότητα εστιάζοντας στις ξένες αγορές. Κυριάρχησε προς το τέλος της δεκαετίας του ’70 και έγινε μέρος...more Publication -
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MMT and Hyperinflation
August 24, 2011 (via EconoMonitor) In last week’s post, I responded to Paul Krugman’s critique of Modern Money Theory (MMT), which argues that a sovereign government that issues its own floating exchange rate currency cannot face an affordability constraint—which means it cannot be forced into involuntary default on its own currency debt. His criticisms really boiled down to [...] Blog -
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A Comment on the Fight against Corruption and Indian Democracy
August 24, 2011 The author is a Professor at the National Institute of Public Finance and Policy, New Delhi. His views are his own. An anti-corruption movement in India, run by a set of elites primarily from Delhi, has put poor Anna Hazare out in front and called itself a national movement. Their key demand is an anti-corruption [...] Blog -
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“It’s a classic case of moral hazard.”
August 23, 2011 Levy Institute President Dimitri Papadimitriou, as quoted in the Huffington Post in reference to revelations of the Fed’s $1.2 trillion in “secret loans” to banks and other companies. Papadimitriou told The Huffington Post that the Fed issued many of its biggest loans during the Bush administration, and that “they didn’t appear to have any difficulty [...] Blog -
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A new “voodoo”?
August 22, 2011 The early phases of the 2012 presidential election season have already brought us a great deal of debate on fundamental economic policy issues. Greg Ip, in the Washington Post‘s PostOpinions, writes about the views of a number of Republican candidates (pointer via Economist’s View). Are they believers in the “voodoo economics” that many recall from [...] Blog -
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Is There Bias at the Fed?
August 19, 2011 Rick Perry’s recent reflections/threats regarding quantitative easing have occasioned some speculation about whether his raising the political profile of the issue might actually affect Fed behavior; making the Fed less willing to engage in a third round of easing. The question of political bias at the Fed has been raised before, here in this Levy [...] Blog -
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Should we debase the currency?
August 19, 2011 You might wonder if this question is a misguided satire of Keynesian proposals like the ones in this Institute one-pager for boosting employment in a time of weak economic growth. The question is not meant as a satire, though. In a time of increasing recession fears, policies specifically aimed at reducing the value of the [...] Blog -
Working Paper No. 682Infinite-variance, Alpha-stable Shocks in Monetary SVAR
August 19, 2011 This paper adumbrates a theory of what might be going wrong in the monetary SVAR literature and provides supporting empirical evidence. The theory is that macroeconomists may be attempting to...more Publication -
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Yes, Casey, there is an aggregate demand problem
August 18, 2011 mul·li·gan noun /ˈməligən/ mulligans, plural A stew made from odds and ends of food (in informal golf) An extra stroke allowed after a poor shot, not counted on the scorecard Casey Mulligan responds to a Paul Krugman post deliciously entitled “The General Theory of Anti-Mulliganism.” Never mind for the moment that Mulligan’s claim that Krugman admits [...] Blog -
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The Shrinking Frontiers of the Possible
August 16, 2011 Joe Nocera’s musings about Kurzarbeit aside, it is not the case that what we need right now are more and newer ideas for increasing growth and jobs. We do not have a scarcity of such policy ideas. What we are lacking are the political institutions that would allow us to carry any of them out. [...] Blog -
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Tcherneva on Stupidity and Self-Inflicted Pain
August 16, 2011 Research Associate Pavlina Tcherneva was interviewed by Ian Masters for his “Background Briefing” about S&P’s downgrade, the distressing new State of America’s Children report, and our misguided focus on debt rather than growth and jobs. “If you take care of the economy, the debt and the deficits take care of themselves.” Blog -
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Wray Responds to Krugman
August 15, 2011 L. Randall Wray has responded in the Huffington Post to Paul Krugman’s latest criticism of Modern Money Theory. In addition to taking issue with the usefulness of Krugman’s historical example (France after WWI), Wray discusses the evolution of MMT and the manner in which it has benefited from the rise of social media. Update: Krugman’s [...] Blog -
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Galbraith Prods the Long-Term Deficit Narrative
August 12, 2011 Senior Scholar James Galbraith’s recent article in The New Republic (“Stop Panicking About Our Long-Term Deficit Problem. We Don’t Have One”) has sparked some reactions from Paul Krugman and Arnold Kling (JG responds briefly to the latter in comments). Galbraith, jumping off from his Levy Institute policy note, argues that there is a certain marked [...] Blog -
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If this was a recovery…
August 12, 2011 It remains to be seen if the stock market collapse of the past three weeks or so will be followed by very bad GDP numbers and renewed job losses. How far did the recovery from the Great Recession get before the big relapse of stock-market volatility? A new Levy Institute one-pager features some graphs that [...] Blog -
Working Paper No. 681
Lessons We Should Have Learned from the Global Financial Crisis but Didn’t
August 12, 2011 This paper begins by recounting the causes and consequences of the global financial crisis (GFC). The triggering event, of course, was the unfolding of the subprime crisis; however, the paper...more Publication -
Working Paper No. 681
Μαθήματα που θα έπρεπε να παίρναμε από την παγκόσμια χρηματοοικονομική κρίση αλλά δεν το κάναμε
August 12, 2011 Η εργασία αυτή ξεκινάει μετρώντας ξανά τα αίτια και τις συνέπειες της παγκόσμιας χρηματοοικονομικής κρίσης (ΠΧΚ). Το γεγονός που πυροδότησε την κρίση ήταν, φυσικά, το ξεδίπλωμα της κρίσης στα στεγαστικά...more Publication -
One-Pager No. 12Δεν πρόκειται για τη συνηθισμένη ύφεση
August 11, 2011 Ο πρόεδρος Δημήτρης Β. Παπαδημητρίου και ο Μελετητής Έρευνας Greg Hannsgen επιχειρηματολογούν ότι η οικονομική υποχώρηση έχει μετατρα̟πεί σε μια παρατεταμένη και πολύ ασυνήθιστη κάμψη της ανάπτυξης, αποτρέποντας μια ανάκαμψη...more Publication