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BlogMMT and Hyperinflation
(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
A Comment on the Fight against Corruption and Indian Democracy
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 [...] -
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“It’s a classic case of moral hazard.”
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 [...] -
Fed’s $1.2 Trillion in Financial Sector Loans “A Classic Case of Moral Hazard”
Huffington Post, August 22, 2011. Copyright © 2011 TheHuffingtonPost.com, Inc. | “The Huffington Post” is a registered trademark of TheHuffingtonPost.com, Inc. All rights reserved. During the 2008 financial crisis, when the nation’s banking system seemed on the verge of collapse, President George W. Bush authorized a $700 billion bailout of the financial industry. The U.S. […] -
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A new “voodoo”?
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 [...] -
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Is There Bias at the Fed?
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 [...] -
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Should we debase the currency?
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 [...] -
Working Paper No. 682Infinite-variance, Alpha-stable Shocks in Monetary SVAR
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 identify structural forms that do not exist, given the true distribution of the innovations in the reduced-form VAR. The paper shows that this problem occurs […] -
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Yes, Casey, there is an aggregate demand problem
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 [...] -
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The Shrinking Frontiers of the Possible
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. [...] -
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Tcherneva on Stupidity and Self-Inflicted Pain
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.” -
Press ReleaseLevy Economics Institute Senior Scholar Jan Kregel Elected to Prestigious Italian Science Academy