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Working Paper No. 723Fiscal Policy, Unemployment Insurance, and Financial Crises in a Model of Growth and Distribution
Recently, some have wondered whether a fiscal stimulus plan could reduce the government’s budget deficit. Many also worry that fiscal austerity plans will only bring higher deficits. Issues of this kind involve endogenous changes in tax revenues that occur when output, real wages, and other variables are affected by changes in policy. Few would disagree […] -
Will the Eurozone Unravel before the Elections?
With Greece teetering and increasing doubts about the solvency of Spanish banks, Masters and Papadimitriou discuss the growing likelihood of a cascading crisis in the eurozone and its potential impact on US elections in November. Full audio of the interview is available here. -
Working Paper No. 722
Guaranteed Green Jobs
In most economies, the potential of saving energy via insulation and more efficient uses of electricity is important. In order to reach the Kyoto Protocol objectives, it is urgent to develop policies that reduce the production of carbon dioxide in all sectors of the economy. This paper proposes an analysis of a green-jobs employer-of-last-resort (ELR) […] -
Working Paper No. 721
The Euro Debt Crisis and Germany’s Euro Trilemma
This paper investigates the causes behind the euro debt crisis, particularly Germany’s role in it. It is argued that the crisis is not primarily a “sovereign debt crisis” but rather a (twin) banking and balance of payments crisis. Intra-area competitiveness and current account imbalances, and the corresponding debt flows that such imbalances give rise to, […] -
Working Paper No. 721
Η κρίση ευρω-χρέους και το ευρωτρίλλημα της Γερμανίας
Η εργασία εξετάζει τα αίτια της κρίσης χρέους στην ευρωζώνη, κυρίως τη συμβολή της Γερμανίας σε αυτή. Η εργασία προβάλλει το επιχείρημα ότι η κρίση δεν είναι πρωτίστως «κρίση δημοσίου χρέους», αλλά μια διπλή κρίση τραπεζικού τομέα και ισοζυγίου πληρωμών. Η ενδο-ανταγωνιστικότητα και οι ανισορροπίες στα ισοζύγια τρεχουσών συναλλαγών, και οι αντίστοιχες ροές χρέους που […] -
BlogGalbraith Appears Before Ron Paul Hearing on the Federal Reserve
Congressman Ron Paul held a subcommittee hearing on reform of the Federal Reserve system a couple days ago that featured testimony from Senior Scholar James Galbraith, Alice Rivlin, John Taylor, Jeffrey Herbener, and Peter Klein. There were a wide variety of topics addressed, including the size of the Fed’s balance sheet, proposals to make the [...] -
Greece Will Muddle Through
CNNMoney, May 10, 2012. © 2012 Cable News Network. A Time Warner Company. All Rights Reserved. The political stalemate in Greece has raised concerns that the nation is more likely than ever to leave the euro currency union. But it may be too soon to say that the Greek government—once there is one—will decide that […] -
Blog
Will Greece “Muddle Through”?
The recent Greek elections, which did not produce a party (or a viable coalition) with a majority in Parliament, have occasioned a lot of excited speculation about Greece either leaving the eurozone or being nudged out. Dimitri Papadimitriou comments today in a CNN Money piece about this possibility and offers a slightly more sober assessment, [...] -
Working Paper No. 720
What Are the Driving Factors behind the Rise of Spreads and CDSs of Euro-area Sovereign Bonds?
This paper examines the underlying dynamics of selected euro-area sovereign bonds by employing a factor-augmenting vector autoregressive (FAVAR) model for the first time in the literature. This methodology allows for identifying the underlying transmission mechanisms of several factors; in particular, market liquidity and credit risk. Departing from the classical structural vector autoregressive (VAR) models, it […] -
Working Paper No. 719
Reorienting Fiscal Policy after the Great Recession
The paper evaluates the fiscal policy initiatives during the Great Recession in the United States. It argues that, although the nonconventional fiscal policies targeted at the financial sector dwarfed the conventional countercyclical stabilization efforts directed toward the real sector, the relatively disappointing impact on employment was a result of misdirected funding priorities combined with an […] -
Working Paper No. 719
Επαναπροσδιορίζοντας τη δημοσιονομική πολιτική μετά τη Μεγάλη Κάμψη
Το κείμενο αξιολογεί τις πρωτοβουλίες δημοσιονομικής πολιτικής που εφαρμόστηκαν κατά τη διάρκεια της Μεγάλης Κάμψης στις Ηνωμένες Πολιτείες. Η συγγραφέας του θεωρεί ότι, παρά το γεγονός ότι οι μη συμβατικές δημοσιονομικές πολιτικές που ήταν προσανατολισμένες προς τον χρηματοοικονομικό τομέα επισκίασαν τις συμβατικές αντικυκλικές προσπάθειες σταθεροποίησης προς τον πραγματικό τομέα της οικονομίας, η σχετική απογοητευτική επίπτωση […] -
Blog
Taking Finance Seriously in 2007
“In late 2007,” writes Peter Orszag, “the midpoint of the range that the Fed projected for real gross-domestic-product growth in 2008 was more than 2 percent.” Most analysts were still expecting the fallout from the subprime crisis to be largely contained because, as Orszag puts it, their models “had at best a very rudimentary financial [...]