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  Policy Notes No. 1

  Greece: Higher GDP Growth at What Cost?

  In 2022, Greek GDP grew at a higher rate than the eurozone average as the nation’s economy rebounded from the COVID-19 shock. However, it was not all welcome news. In particular, Greece registered its largest current account deficit since 2009. Despite a widespread focus on fiscal profligacy, it is excessive current account and trade deficits—largely […]
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  Working Paper No. 1018

  The Unbearable Weight of Aging

  The aging of the global population is in the headlines following a report that China’s population fell as deaths surpassed births. Pundits worry that a declining Chinese workforce means trouble for other economies that have come to rely on China’s exports. France is pushing through an increase of the retirement age in the face of […]
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  Working Paper No. 1017

  Rentiers, Strategic Public Goods, and Financialization in the Periphery

  This paper revisits a traditional theme in the literature on the political economy of development, namely how to redistribute rents from traditional exporters of natural resources toward capitalists in technology-intensive sectors with a higher potential for innovation and the creation of higher-productivity jobs. Porcile and Lima argue that this conflict has been reshaped in the […]
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  Read Yeva Nersisyan and L. Randall Wray’s latest op-ed on SVB and the Fed

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  Working Paper No. 1016

  Monetary Policy and the Gender and Racial Employment Dynamics in Brazil

  Monetary policy has been historically concerned with controlling inflation, using the interest rate as its main tool. However, such policies are not gender- or race-neutral. This paper explores econometrically the effect of changes in the interest rate for female and black employment creation in Brazil. We conduct a panel data fixed effects analysis for 13 […]
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  Working Paper No. 1015

  CBDC Next-Level: A New Architecture for Financial “Super-Stability” 

  Fractional reserve regimes generate fragile banking, and full reserve regimes (e.g., narrow banking) remove fragility at the cost of suppressing the role of banks as lenders. A Central Bank Digital Currency (CBDC) could provide safe money, but at the cost of potentially disrupting bank lending. Our aim is to avoid this potential disruption. Building on […]
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  Working Paper No. 1014

  Chinese Yuan Interest Rate Swap Yields

  This paper models the dynamics of Chinese yuan (CNY)–denominated long-term interest rate swap yields. The financial sector plays a vital role in the Chinese economy, which has grown rapidly in the past several decades. Going forward, interest rate swaps are likely to have an important role in the Chinese financial system. This paper shows that […]
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  Institute Scholar Yeva Nersisyan’s op-ed “Lowering inflation isn’t a job for a one-trick pony” featured in The Hill

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  Working Paper No. 1013

  The Economic and Environmental Effects of a Green Employer of Last Resort

  We assess the sectoral impact of the implementation of a “green” employer of last resort (ELR) program in the US, based on an environmental modification of an extended Kurz’s (1985) multiplier framework and data from OECD Input-Output tables. We use these multipliers to estimate the impact of an “optimal” ELR, designed to maximize the impact […]
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  We mourn the untimely passing of the Levy Institute’s long-serving Research Associate Nilüfer Çagatay, a bright and engaging scholar, a leader in feminist economics, and a very dear friend and collaborator from the very early years of the Institute.

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  Working Paper No. 1012

  An Analysis of UK Swap Yields

  John Maynard Keynes argued that the central bank influences the long-term interest rate through the effect of its policy rate on the short-term interest rate. However, Keynes's claim was confined to the behavior of the long-term government bond yield. This paper investigates whether Keynes's claim holds for the yields of spread products and over-the-counter financial […]
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  One-Pager

  The Causes of Pandemic Inflation

  While the trigger for the Covid recession was unusual—a collapse of the supply side that produced a drop in demand—the inflation the US economy is now facing is not atypical, according to L. Randall Wray. In this one-pager, he explores the causes of the current inflationary environment, arguing that continuing inflation pressures come mostly from […]